The Fed’s favourite inflation gauge - the personal consumption expenditures (PCE) price index - due on Friday will be closely watched for clues about the direction of interest rates over the rest of the year.
The data comes as markets are becoming resigned to the higher-for-longer interest rate narrative after last weeks Fed minutes, along with cautious sounding remarks from policymakers who expressed doubt whether inflation is indeed on a reliable downward trajectory.
Investors will also get the chance to hear from several Fed speakers during the week including Governor Michelle Bowman, Cleveland Fed President Loretta Mester, Governor Lisa Cook, New York Fed President John Williams and Atlanta Fed President Raphael Bostic.
The economic calendar also features revised data on first quarter economic growth on Thursday and the Fed’s Beige Book on Wednesday.
Euro zone inflation
The European Central Bank has all but promised to lower interest rates from a record high of 4% in at its upcoming June meeting, but it remains to be seen how quickly it will cut rates after that, particularly if inflation data out on Friday shows price pressures remain volatile.
Economists expect euro zone inflation to tick up 2.5% in May year-on-year, from 2.4% in April, while underlying inflation is seen holding steady at 2.7%.
This alone is unlikely to deter the ECB from cutting in June but some officials are already arguing against the need to ease any further.
The economic calendar for the bloc also features Germany’s Ifo business climate index on Monday, and the ECB’s survey of inflation expectations on Tuesday.
Japan data
Tokyo inflation data due on Friday will be closely watched as markets try to gauge when the Bank of Japan could next raise rates.
The figures come two weeks before the BOJ's next monetary policy meeting, where some are betting the central bank could deliver its second rate rise after March's historic move.
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