Pressure mounts on US Fed chief Powell in tee-up to GDP, jobs data

WASHINGTON – US Federal Reserve chair Jerome Powell and his colleagues will step into the central bank’s boardroom on July 29 to deliberate on interest rates at a time of immense political pressure, evolving trade policy, and economic cross-currents.

In a rare occurrence, policymakers will convene in the same week that the government issues reports on gross domestic product, employment and the Fed’s preferred price metrics. Fed officials meet on July 29 and 30, and are widely

expected to keep rates unchanged

again. 

Forecasters anticipate the heavy dose of data will show that economic activity rebounded in the second quarter, largely due to a sharp narrowing of the trade deficit, while job growth moderated in July. The third marquee report may show underlying inflation picked up slightly in June from a month earlier.

While the government’s advance estimate of GDP for the quarter is projected to show an annualised 2.4 per cent increase – after the economy shrank 0.5 per cent in January-March – July 30’s report will probably reveal only modest household demand and business investment.

The median forecast in a Bloomberg survey calls for a 1.5 per cent gain in consumer spending to mark the weakest back-to-back quarters since the onset of the Covid-19 pandemic in early 2020. A shaky housing market also weighed on second-quarter activity.

At the end of the week, the July jobs report is forecast to show that companies are becoming more deliberate in their hiring. Employment likely moderated after a June increase that was boosted by a jump in education payrolls, while the unemployment rate is seen ticking up to 4.2 per cent.

Private payrolls are projected to rise by 100,000 after the smallest advance in eight months. Through the first half of the year, the pace of hiring by companies has eased compared with the 2024 average.

The breadth of job growth has been relatively narrow as well. Separate figures out on July 29 are forecast to show job openings declined in June.

A few Fed officials have started to raise concerns about what they see as a fragile job market, including two who have said they see merit in considering a rate cut now.

Pressure is also mounting from outside the boardroom. President Donald Trump has been

vocal about his desire

to see Mr Powell and Co lower borrowing costs for consumers and businesses. 

The President has frequently chastised Mr Powell for moving too slowly, while at the same time

taking aim at his stewardship over construction cost

overruns related to renovation of the Fed’s Eccles Building headquarters in Washington. 

Mr Powell and other central bankers have stressed the need for patience as the Trump administration’s tariffs risk a re-acceleration of inflation. So far in 2025, since a variety of US duties on imports were imposed, price pressures have been modest.

The government’s personal income and spending report for June, due on Aug 1, is projected to show the Fed’s preferred core inflation gauge accelerated slightly from a month earlier, indicating that tariffs are only gradually being passed through to consumers.

Further north, the Bank of Canada is also set to hold, keeping borrowing costs steady at 2.75 per cent for a third consecutive meeting amid trade uncertainty, sticky core inflation, and an economy that seems to be handling tariffs better than many economists expected.

Officials will release a monetary policy report, but it is not yet known whether they will return to point forecasts or release multiple scenarios, as they did in April amid volatile US trade policy. 

Industry-based GDP data for May and a flash estimate for June are expected to point to a contraction in the second quarter.

Canadian Prime Minister Mark Carney is pushing to get a trade deal done with Mr Trump by Aug 1, but he and the country’s provincial leaders have downplayed expectations, saying they are focused above all on getting a good agreement. 

On a global level, Mr Trump’s Aug 1 deadline also takes centre stage, with several countries – including the European Union, South Korea and Switzerland – still hoping to clinch trade agreements. 

European Commission chief Ursula von der Leyen

will travel to Scotland

to meet the US President on July 27 in her attempt to secure a pact. EU officials have repeatedly cautioned that a deal ultimately rests with Mr Trump, making the final outcome difficult to predict.

Elsewhere, central bankers in Japan and Brazil are also likely to keep rates unchanged, while cuts are anticipated in South Africa, Chile, Ghana, Pakistan and Colombia.

Investors will also watch for new International Monetary Fund’s forecasts, global purchasing manager index readings, and a barrage of GDP and inflation data in Europe.

Asia

Asia’s central bank highlight comes on July 31, with the Bank of Japan expected to hold its benchmark rate steady at 0.5 per cent. Governor Kazuo Ueda’s reaction to the US trade deal will be a focus after his deputy said the agreement boosted the likelihood of economic forecasts being met – a key condition for another rate hike.

A slew of data will reflect the impact of Mr Trump’s tariff campaign. Trade figures are due from the Philippines, Hong Kong, Sri Lanka, Thailand, South Korea and Indonesia, while manufacturing PMI figures are due across the region. 

Investors will also watch for new International Monetary Fund’s forecasts, global purchasing manager index readings, and a barrage of GDP and inflation data in Europe.

China gets two sets of July PMI data at the end of the week, with attention on whether the official gauge can edge higher for a third month and S&P Global’s index can stay in the expansion zone.

Industrial earnings – published on July 27 – revealed a second straight month of declines, with the authorities set to intensify their drive to rein in excessive competition that is dragging down prices and compounding the pain from US tariffs.

Others releasing PMI statistics include Indonesia, South Korea, Malaysia, the Philippines, Thailand, Taiwan and Vietnam, all on Aug 1.

Meantime, Australia gets second quarter data that is expected to show consumer inflation cooled a tad, which could give the Reserve Bank room to resume its rate cutting cycle when it next sets policy on Aug 12. 

Pakistan’s central bank may cut rates on July 30, two days before the country – and Indonesia – gets new inflation readings. 

Europe, Middle East, Africa

Output and inflation data across Europe takes centre stage. Economists in a Bloomberg poll expect July 30’s figures to show that euro-area GDP remained flat in the three months through June, after a 0.6 per cent expansion in the first quarter.

That performance was lifted by a front-loading in trade before Mr Trump’s expected announcement of global import duties.

Among the bloc’s biggest economies, Germany is forecast to see the worst performance, with output slipping 0.1 per cent from the previous quarter. Spain is expected to keep growing by 0.6 per cent, with France and Italy expanding just slightly.

Smaller economies publish their numbers throughout the week, with Ireland – so often a wild card for the bloc’s economy – kicking things off on July 28.

Meanwhile, inflation data for the euro area on Aug 1 are set to confirm the European Central Bank’s confidence that it has been brought under control.

Consumer prices are forecast to have risen 1.9 per cent in July, less than the previous month’s 2 per cent and just below the central bank’s goal. A measure of underlying inflation probably remained steady, at 2.3 per cent.

With most of Europe in vacation mode, only a single ECB speaker has a scheduled appearance – Spain’s Mr Jose Luis Escriva, on July 28 – while results from the central bank’s monthly survey of consumers’ inflation expectations are due a day later, and its wage tracker comes on July 30.

The Bank of England goes into a quiet period ahead of its Aug 7 rate decision, with economic releases on the UK agenda primarily linked to housing.

Rate decisions are scheduled across Africa:

Latin America

Chile’s central bank on July 29 is likely to deliver its first rate cut of 2025, opting for a quarter-point reduction to 4.75 per cent.

Consumer prices in June cooled more than expected and inflation is once again slowing in line with central bank forecasts, which have the headline reading back to the 3 per cent target in 2026.

Mexico’s flash second-quarter data posted on July 30 should show Latin America’s No. 2 economy posting slight quarterly and year-on-year expansions amid the drag from Mr Trump’s trade and tariff policies.

Most analysts see the second half of the year posing a greater challenge.

In the region’s second central bank rate decision of the week, Banco Central do Brasil is widely expected to draw a line under a seven-meeting, 450 basis-point tightening campaign and keep the key Selic rate at 15 per cent.

Recent inflation prints and near-term expectations are beginning to come down, but policymakers in June signalled that borrowing costs will likely remain steady for a long period.

In Colombia, headline inflation is running above the top of BanRep’s tolerance range and core readings remain stubbornly elevated, but policymakers probably saw just enough cooling in June’s consumer price data to justify a quarter-point cut, to 9 per cent.

Peru on Aug 1 kicks off consumer price reports for the region’s big inflation targeting economies.

The early consensus among economists is that July’s annual reading will come in near June’s 1.69 per cent print. BLOOMBERG