The Week Ahead - 16 - 20 June 2025

United States – On Wednesday evening, the FOMC will keep rates on hold for another meeting. The decision will be accompanied by another set of forecasts. In the previous round, which pre-dates 'liberation day,' not all members had incorporated tariffs in their forecasts. Consequently, we expect the dot plot to only show a single 25 bps cut by year end, along with an increase in inflation expectations and decrease in growth expectations. This would imply the Fed is slowly moving in line with our base case that sees no rate cuts this year. On Tuesday we get retail sales, which we expect to contract at -0.4% m/m, predominantly on the back of falling car sales. The control group, which excludes, amongst others, car sales, is likely to show some pickup at 0.2% m/m. We expect a modest gain in industrial production.

UK –The Bank of England is expected to keep policy on hold amid continued elevated inflationary pressure. CPI inflation for May, released the day before, is likely to confirm this. Inflation is expected to hold well above target at 3.6% following the jump in April, despite the drag from lower petrol prices.

China – May activity data (Monday) are expected to come in close to their April readings. Consumer subsidies seem to underpin consumption (home appliances, cars) somewhat, although the supply side remains stronger than the demand side, while the Geneva truce agreed mid-May softens a key external headwind. Following a round of policy rate cuts in May, we expect the 1-year loan prime rate to be kept at 3.00% for now (Friday).

Japan – We expect the Bank of Japan (BoJ) to keep its target rate at 0.50% on Tuesday, in line with consensus, as Governor Ueda will likely wait for further clues on the development of trade talks with the US and the trajectory for growth and inflation. We still foresee a very gradual rate hike path, with one 25bp rate hike scheduled later in 2025 in and another one in the course of next year. The BoJ is expected to also present further details about the trajectory of its tapering plans; markets generally expect the reduction in the monthly buying of government bonds by the BoJ to slow next year.