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Global economic highlights: Inflation, monetary policy, and corporate earnings

Inflation in the US and China will dominate headlines this week, alongside the European Central Bank meeting, discussing Europe’s lower-than-expected inflation.

Additionally, the US March quarter reporting season commences late in the week, with Delta Airlines on Thursday and JPMorgan Chase, Citi, and Wells Fargo leading the reporting companies on Friday. Overseas, results from Tesco supermarkets chain of the UK and Fast Retailing, the giant Japanese mass clothing chain owner, are expected.

While Chinese inflation may not significantly impact sentiment like the US Consumer Price Index data for March, economists expect positive readings for China’s CPI, dispelling concerns of deflation. In Australia, it’s a relatively quiet week with the release of the monthly NAB business survey and the Westpac consumer sentiment report. Annual meetings for Santos and AMP are also scheduled. However, the highlight remains the US CPI release, carrying significant weight for the Federal Reserve’s interest rate decisions.

After two months of above-consensus inflation readings, US economists anticipate an improvement in March, with headline CPI expected around 3.2% to 3.4% annually. Core CPI inflation is forecasted to ease slightly to 3.7%. Meanwhile, the release of US producer prices for March and the minutes from the latest Fed Open Market Committee meeting are scheduled. In Canada, the central bank has a rate decision midweek.

China’s March inflation data, expected to rise from February’s figures, will be closely watched. Despite forecasts for improvement, sluggish demand since mid-February might affect producer prices. Friday also sees China’s trade data for March and the first quarter released.

The European Central Bank meeting is anticipated to maintain the current monetary policy stance, although ECB President Christine Lagarde might hint at a potential interest rate cut in June. Euro area CPI inflation fell in March, sparking discussions on whether the ECB might act before the Fed. Several countries will release final March inflation data, with expectations for stable readings.

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