US Employment and Inflation Reports Due This Week... Focus on Interest Rate Impact

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[Asia Economy Reporter Kim Hyunjung] Major economic indicators such as the upcoming U.S. employment and inflation reports scheduled for release this week are expected to draw attention for their potential impact on the Federal Reserve's (Fed) interest rate hike stance. Geopolitical tensions surrounding Russia and Ukraine have extended beyond a month, continuing to increase volatility in the global markets.

This week, the employment and inflation reports, which the Fed considers key indicators in its policy decision-making process, will be released. According to experts from The Wall Street Journal, the forecast for March nonfarm payrolls is a sharp decline from 678,000 in the previous month to 460,000. The unemployment rate is expected to decrease from 3.8% to 3.7%, approaching the pre-COVID-19 pandemic record low of 3.5%.

The number of employed persons particularly influences whether the Fed will continue its aggressive rate hikes. If new employment numbers remain around 500,000, the Fed may accelerate its rate increase pace.

This week will also see the release of the Personal Consumption Expenditures (PCE) price index, favored by the Fed. The core PCE price index rose to 5.2% in January, while the overall PCE price index increased by 6.1%. Economists' forecast for the core PCE in February is 5.5%.

If inflation figures come in higher than expected, it is likely to strengthen the Fed's 'big step' approach. The market is placing weight on the possibility that the Fed will raise the benchmark interest rate by 50 basis points in both the May and June meetings.

Other notable indicators this week include the Consumer Confidence Index, Personal Consumption Expenditures, ISM Manufacturing Index, and the preliminary estimate of the fourth-quarter Gross Domestic Product (GDP).

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