The week will start off slowly in terms of scheduled economic events, but markets will remain alert to any unexpected announcements from the U.S. administration, particularly regarding potential retaliatory tariffs.
On Tuesday, the U.K. will release the claimant count change, the average earnings index 3m/y, and the unemployment rate. In Canada, attention will turn to inflation data.
Wednesday brings inflation data from the U.K. and retail sales figures m/m from the U.S. In Canada, the focus will be on the Bank of Canada’s monetary policy announcement. Additionally, Fed Chair Powell is scheduled to speak on the economic outlook at the Economic Club of Chicago.
On Thursday, New Zealand will release its inflation data, while Australia will publish employment change and the unemployment rate. The eurozone will also be in focus with the European Central Bank’s monetary policy announcement.
Most major banks will be closed on Friday in observance of Good Friday.
In the U.K., the consensus for the claimant count change is 30.3K vs the prior 44.2K. The average earnings index 3m/y is expected at 5.7%, slightly below the previous 5.8%, while the unemployment rate is projected to remain unchanged at 4.4%.
The labor market is showing signs of cooling, though wage growth has remained relatively strong. In terms of monetary policy, the Bank of England is not finished with rate cuts, particularly as inflation remains elevated and well above the target.
The U.K. CPI y/y is only expected to drop from 2.8% to 2.7% and this is likely because of falling gas prices. However, services inflation is proving to be more stubborn.
In the U.S., the consensus for core retail sales m/m is 0.4% vs. the prior 0.3%, and for retail sales m/m is 1.4% vs. the prior 0.2%.
ING analysts suggest that one of the main reasons for the strong retail sales data may be consumers making major purchases in advance of anticipated tariffs. They highlight a notable 10.6% m/m jump in auto volumes based on Wards data, along with increased credit card spending on appliances and electronics.
Tariff-related uncertainty is expected to persist for the time being, and its impact on future economic data will continue to be closely watched.
Inflation data for Canada will be released on Tuesday ahead of the BoC meeting. The consensus for CPI m/m is 0.7% vs. the prior 1.1%; median CPI y/y is expected to remain unchanged at 2.9%; trimmed CPI y/y is also forecast to hold steady at 2.9%, while common CPI y/y is likely to decline from 2.5% to 2.4%.
Analysts are divided on whether the BoC will deliver a rate cut at this week’s meeting. While recent inflation data has surprised to the upside and uncertainty surrounding tariffs remains elevated, a weakening labor market and economic growth concerns may support the case for another cut. Wells Fargo analysts point to the 32.6K drop in March employment figures and the already deteriorating business sentiment captured by the BoC’s Q1 Business Outlook Survey conducted in February, even before the higher U.S. tariffs went into effect.
In New Zealand, the consensus for the CPI q/q is 0.7% vs. the prior 0.5%, with the annual rate expected at 2.3%. Westpac analysts attribute this to elevated food and fuel costs.
Although inflation is below the RBNZ’s desired midpoint target, it still falls within the 1–3% target range. From a monetary policy perspective, even if inflation surprises to the upside, it is unlikely to shift the Bank’s policy stance in the near term.
In Australia, the consensus for the employment change is 40.2K vs. -52.8K, and the unemployment rate is expected to rise slightly from 4.1% to 4.2%.
After last month’s sharp decline, a solid rebound is anticipated. Analysts from Westpac noted that March is expected to bring a recovery in the participation rate, rising from 66.8% to 67.0%, which would support the employment rebound. Although weather disruptions from Ex-Tropical Cyclone Alfred add some uncertainty, any impact on the data is expected to be limited.
At this week’s meeting, the ECB is widely expected to deliver a 25 bps rate cut to 2.25%. Recently, the Bank had a slightly less dovish tone as the economic situation in Germany and the broader eurozone shows signs of improvement. However, uncertainty surrounding tariffs is expected to add pressure in the near future.
Inflation data in the eurozone has shown continued progress, particularly in core and services inflation, supporting the case for rate cuts. Analysts expect additional 25 bps cuts at the June and September meetings, bringing the deposit rate down to 1.75% by the end of the year.
