This week's economic calendar features key inflation data with the PCE Price Index on Friday, amid mounting concerns over Trump's April 2 tariff plans. Markets are pricing in rate cuts despite Powell's downplaying of inflation risks, while watching for signals in housing data, durable goods orders, and consumer sentiment surveys.

Key Events and Data to Watch This Week (March 24-28, 2025)

Monday, March 24

• Eurozone HCOB Composite PMI (Mar) - Preliminary

• UK S&P Global/CIPS Composite PMI (Mar) - Preliminary

• US S&P Global Composite PMI (Mar) - Preliminary

Tuesday, March 25

• Germany IFO Expectations (Mar)

• US Housing Price Index (Jan)

• US Consumer Confidence (Mar)

• US New Home Sales (Feb)

Wednesday, March 26

• Australia Monthly Consumer Price Index (Feb)

• UK Consumer Price Index (Feb)

• UK Retail Price Index (Feb)

• US Durable Goods Orders (Feb)

Thursday, March 27

• US Gross Domestic Product (Q4)

• US Personal Consumption Expenditures Prices (Q4)

• US Pending Home Sales (Feb)

• Japan Tokyo Consumer Price Index (Mar)

Friday, March 28

• Germany GfK Consumer Confidence Survey (Apr)

• UK Gross Domestic Product (Q4)

• UK Retail Sales (Feb)

• Eurozone Consumer Confidence (Mar)

• US Personal Consumption Expenditures Price Index (Feb)

• US Personal Income (Feb)

• US Personal Spending (Feb)

• US UoM Consumer Sentiment Index (Mar)

• US UoM Consumer Inflation Expectations (Mar)

April 2 Tariff Deadline Looms: Will New Trade Measures Complicate Fed's Strategy?

Amid rising concerns that Donald Trump's tariff policies could accelerate inflation and undermine growth, Federal Reserve officials left interest rates unchanged for a second consecutive meeting last week. However, in his post-meeting remarks, Fed Chair Jerome Powell downplayed the mounting risks.

The official statement emphasized growing uncertainty and reflected policymakers' intent to maintain a cautious stance until more clarity is gained regarding the economic impact of Trump's trade policies. However, in his post-meeting remarks, Fed Chair Jerome Powell downplayed the mounting concerns. He argued that the inflationary effects of tariffs would likely be transitory, adding that soft data had been exaggerated, while hard data continued to point to a resilient economy.

"Hard" data refers to government statistics such as employment, inflation, and industrial production figures. So far this year, these indicators have broadly confirmed that while the economy may be cooling, it remains on solid ground-potentially suggesting that stagflation or recession fears are somewhat overstated.

Nonetheless, in the midst of ongoing uncertainty, data still point to a weakening labor market, slowing consumption, and persistent inflation-raising questions about the economic outlook.

Meanwhile, "soft" data, including household and business surveys, paint a more pessimistic picture. Consumers are expecting the highest inflation in decades, with growing concerns about job security and personal finances. At the same time, businesses are postponing hiring and investment decisions due to uncertainty.

While hard data show what has already happened, soft data reveal how economic agents perceive the future-keeping concerns alive. Indeed, Fed officials appear to acknowledge these risks: they lowered growth projections while revising inflation forecasts upward. And although Powell stated the impact of tariffs will be temporary, he also noted that "we really can't know," acknowledging that much will depend on how the trade measures ultimately unfold.

A similar message came from Chicago Fed President Austan Goolsbee, who pointed out that imports account for only 11% of U.S. GDP and said the inflationary effects of tariffs are likely to be transitory. However, the type of tariffs Goolsbee was referring to were one-off measures that are not met with retaliation and do not spread beyond their initial scope.

So far, Trump's tariffs have triggered retaliation from countries such as Canada, China, and the European Union. Trump, in turn, has threatened to impose new tariffs on any country that retaliates. He is also preparing to announce reciprocal global tariffs on April 2. While the scope of these new tariffs remains unclear, should Trump unveil an aggressive plan and further retaliation follow, the inflation impact may not play out as the Fed hopes.

Policy Path Shrouded in Uncertainty-Can This Week's Data Offer Direction?

Markets are pricing in both inflation and growth risks, and concerns persist despite Powell's attempt to soothe them. These concerns are keeping expectations for rate cuts elevated and weighing on the U.S. dollar.

According to swap market data, approximately 70 basis points of rate cuts are priced in by year-end-implying two quarter-point cuts in 2025 and a third cut in January 2026.

Meanwhile, data from the Commodity Futures Trading Commission show that long-dollar positions-which surged to $34 billion after the elections-have sharply declined since mid-January. Hedge funds, asset managers, and other investors have increased their bets on a weaker dollar.

As Duhani Capital Research team, we assess that unless concerns over slowing growth subside, rate cut expectations will likely remain elevated, and the U.S. dollar may continue to weaken. In such an environment, demand for safe-haven assets like gold is expected to stay strong.

Investors will continue to monitor upcoming data and developments related to tariffs for additional clues.

This week, markets will focus on the Fed's preferred inflation gauge-the Personal Consumption Expenditures (PCE) Price Index. According to median forecasts from economists surveyed by Bloomberg, core PCE, which excludes food and energy, is expected to have risen 0.3% in February, bringing the annual rate to 2.7%.

Other key data releases this week include construction sector figures and durable goods orders, which may provide insight into corporate capital expenditure plans.

Before the week ends, markets will also digest the University of Michigan's March consumer sentiment and inflation expectations survey, offering a real-time snapshot of how consumers view the economy.