This week will be an important week from a central banking perspective as many expect the US Federal Reserve to deliver a second 50 basis point rate hike on Wednesday. Investors will be watching closely to see what Fed Chairman Jerome Powell has to say about future rate hikes following stronger than expected inflation data released last Friday. The Bank of England is expected to raise the rate for the fifth consecutive time amid a growing cost of living crisis. The Bank of Japan and the Swiss National Bank will also hold monetary policy meetings. U.S. retail sales data will provide insight into whether inflation is reducing household purchasing power, and the stock market is in for another turbulent week. Here’s what you need to know at the start of the week.

1. FRS TO RAISE RATES AGAIN

The Fed will almost certainly raise the interest rate another 50 basis points on Wednesday, adding to the 75 basis point increase in March.

A hike of another half a percentage point is set for July, with a similar move in September highly likely, though that is less clear.

Friday’s release of “hot” U.S. inflation data for May revived concerns that Powell may signal a faster rate hike in the future. Investors are concerned that a sharp rate hike by the Fed could send the economy into recession.

Market watchers will be keeping a close eye on Powell’s press conference after the monetary policy meeting, as well as the Fed’s updated economic forecasts and its “dot plot,” which shows the projected outlook for interest rate movements.

2. THE BANK OF ENGLAND WILL RAISE RATES FOR THE FIFTH CONSECUTIVE TIME

The Bank of England is expected to hold its fifth consecutive 25 basis point rate hike since December on Thursday, despite a growing number of global central banks opting for a half-point increase.

The Bank of England was the first major central bank to begin withdrawing its pandemic-era stimulus back in December, but that didn’t stop U.K. inflation from hitting a four-year high of 9% in April, nearly 5 times the Bank of England’s 2% target.

The Bank of England expects inflation to exceed 10% later this year, and Bank Governor Andrew Bailey said in April that the Bank is balancing the fight against rising inflation with recession.

This week will also be a busy one for economic data in the UK, starting with GDP data for April on Monday, which is expected to be unchanged. Tuesday’s employment data is expected to point to continued tightness in the labor market, with unemployment falling and wage growth accelerating.

3. BANK OF JAPAN AND BANK OF SWITZERLAND TO MEET

The Bank of Japan will meet on Friday and is expected to stick to its ultra-soft monetary policy, but pressure to change course is mounting as rising yield differentials push the yen to multi-year lows, adding to inflationary pressures.

The Swiss National Bank is expected to keep its -0.75% interest rate – the world’s lowest – unchanged at its meeting on Thursday. But with Swiss inflation hitting its highest level in 14 years in May and the European Central Bank expected to raise rates in July, there could finally be an upward shift.

Meanwhile, ECB chief Christine Lagarde will give a speech on Wednesday, which will be the subject of intense scrutiny following her announcement last week that the ECB will hold its first rate hike since 2011 next month, followed by a potentially larger increase in September.

4. US DATA

On Wednesday, the US will release retail sales data for May, which is expected to decline on the back of falling auto sales. Industrial production data due on Friday is also expected to slow but remain steady.

Also on the economic calendar will be a report on producer price inflation on Tuesday and data on initial jobless claims on Thursday and housing starts nationwide.

Data released last Friday showed that U.S. consumer inflation jumped 8.6 percent year-over-year in May, the biggest increase since 1981, when gasoline prices hit a record high and food costs soared.

The rapid price pressures are forcing consumers to change their spending habits, heightening fears of recession.

5. STOCK MARKET VOLATILITY

U.S. stock indexes recorded their biggest weekly percentage decline since January and fell sharply on Friday after a May inflation report dashed hopes that price pressures may have peaked.

The stock market has been falling for most of the year amid concerns about inflation, interest rate hikes and the likelihood of a recession.

The market’s fall over the past few weeks has partially halted on hopes that a potential peak in inflation will allow the Fed to start acting less tightly later this year.

“Given that U.S. price pressures show no signs of abating, we doubt the Fed will take its foot off the brake anytime soon,” Capital Economics analysts wrote Friday. – As such, we suspect more trouble awaits the U.S. asset market as Treasury yields continue to rise and the stock market remains under pressure.”