The Fed’s June minutes showed a 3.6% policy rate and an even split among 18 submitted projections over whether rates should rise or stay flat or fall by year-end. AI infrastructure demand appeared as a new inflation pressure point.
June nonfarm payrolls rose 57,000, below the 115,000 economist forecast cited by MarketWatch, while the unemployment rate eased to 4.2%. BLS also revised April and May payrolls down by a combined 74,000.
The Bank of England held Bank Rate at 3.75% in a 7-2 vote, with Megan Greene and Huw Pill backing a 25 bp hike to 4%. The June minutes point to 2.8% CPI, tighter financial conditions and energy-price volatility as the policy trade-off.
The Bank of Japan raised its money-market guideline to around 1.0%, a 25 bp move from 0.75%, with a 7-1 Policy Board vote. The statement tied the move to faster crude-oil pass-through, rising medium- to long-term inflation expectations and still-negative real rates.
Bank Indonesia raised the BI-Rate by 25 bps to 5.50%, with the Deposit Facility at 4.50% and Lending Facility at 6.25%. The off-cycle move followed rupiah weakness and foreign portfolio outflows.
May nonfarm payrolls rose 172,000, more than double the 80,000 Dow Jones consensus, while unemployment held at 4.3%. CNBC, citing the Bureau of Labor Statistics report, said Treasury yields moved sharply higher as the labor surprise reduced near-term Fed-cut odds.
April U.S. Producer Price Index jumped 6.0% year-over-year (consensus: 4.8%) and 1.4% month-over-month (consensus: 0.5%), marking a four-year high for wholesale inflation. Core PPI hit 5.2% YoY against a 4.3% estimate, driven by energy price surge from the 11-week Iran-Gulf conflict. Bank of America pushed its first Federal Reserve rate-cut forecast to July 2027, with Kalshi prediction markets now pricing 47% odds of a hike before that date.
U.S. consumer prices rose 3.8% annually in April — 0.1 percentage point above the Dow Jones consensus and the highest since May 2023. Energy prices surged 17.9% year-over-year as WTI oil topped $100 per barrel amid the Iran-Hormuz conflict, while real average hourly wages turned negative on an annual basis for the first time in three years. CME Group data shows markets now pricing roughly 30% probability of at least one Fed rate hike before year-end.
April nonfarm payrolls came in at 115,000, more than double the Dow Jones consensus of 55,000, in the strongest labor market upside surprise in recent months. Unemployment ticked up to 4.3% as more workers re-entered the labor force. The beat sharply reduces the case for a June Fed rate cut, with market expectations now pointing toward September 2026.
The ECB left its deposit rate at 2.00% on April 30 and kept the main refinancing and marginal lending rates at 2.15% and 2.40%. The bigger message was that energy prices are now pushing inflation risks up while growth risks are moving the other way.
The Fed left the federal funds target at 3.50%-3.75% on April 29, but the real signal was a four-way dissent that exposed a deep split over how quickly policy should pivot. Energy-driven inflation risk is now colliding with softer labor momentum inside the Committee.
The Bank of Japan kept the overnight call-rate target at around 0.75% in a 6-3 vote and lifted its FY2026 core CPI view to 2.5%-3.0%. The April outlook said an oil shock tied to the Middle East would slow growth in 2026 even as inflation risks skew upward.