An announcement by the Federal Reserve will be the focus of the week, where interest rates are expected to be left on hold but investors will watch for any signals on the timing of future rate cuts.

Recent weaker-then-expected consumer and producer price inflation prompted many in the market to bring forward their expectations for the next rate cut.

Money markets are fully pricing in a rate cut for October, although there is a high chance it could be as early as September, LSEG data show. Previously, markets hadn’t fully priced in a rate reduction until December.

A number of other central bank decisions are scheduled during the week, including in Japan, China the U.K. and Switzerland.

Meanwhile, President Trump is set to join the leaders of G-7 countries, plus others, at a summit in Canada. Nations including Japan, Canada and Mexico hope face time with Trump will help them persuade the president to lower at least some of his tariffs. 

And Israel and Iran struck at each other’s energy facilities over the weekend, bringing the conflict closer to an industry vital to the global economy. Read more.

The mood among American consumers brightened in June following signs that President Trump’s trade wars haven’t caused major economic upheaval thus far, though sentiment still reflects an unsettled view of the economy.

The University of Michigan said Friday its preliminary index of consumer sentiment for June was 60.5, above a final reading of 52.2 in May and the first increase the index had marked in six months. The index had previously fallen for four consecutive months before stabilizing in May. Its current reading remains about 18% lower than it was in December 2024, when sentiment had risen following the election.

The Bank of England is set to leave its key interest rate on hold Thursday as it charts a middle path between other European central banks that have lowered borrowing costs more aggressively, and a Federal Reserve that has stopped cutting.

Like their counterparts at the Fed, policymakers at the BOE worry that a pickup in inflation driven changes in government policy may prove long-lasting, in part because households and businesses have only recently experienced a burst of inflation that they were initially told would be transitory, but proved not to be. Read more.

Stablecoins’ going mainstream wouldn’t take all of banks’ deposits away. Just some of the better ones.

The Senate looks set to soon pass the so-called Genius Act, which will set guidelines for issuers of stablecoins—digital tokens that are fully backed by fiat currencies such as dollars. One big debate over the wisdom of giving stablecoins a regulatory framework centers around how they would affect the current banking system if they were to hugely expand in size.

8:30 a.m.: Empire State Manufacturing Survey
10 a.m.: Online Help Wanted Index

5 a.m.: Japan Monetary Policy Meeting decision
8:30 a.m.: Import & Export Price Indexes
8:30 a.m.: Advance Monthly Sales for Retail & Food Services
9:15 a.m.: Industrial Production and Capacity Utilization
10 a.m.: Manufacturing & Trade: Inventories & Sales
10 a.m.: NAHB Housing Market Index
7 p.m.: U.S. Federal Open Market Committee meeting

Retail sales continued to grow in May even though consumers slowed down on stocking up ahead of tariffs, according to the National Retail Federation. May sales were up in seven out of nine categories on a yearly basis, led by digital products, sporting-goods stores and general-merchandise stores, says NRF. It also disclosed that total retail sales, excluding automobiles and gasoline, were up 0.49%, seasonally adjusted month over month, and up 4.44% unadjusted year over year in May. "The data for May indicates that the pull-forward in consumer demand ahead of tariffs is likely dissipating. While momentum remains, the nature of consumer spending is shifting as economic uncertainty increases," NRF President and CEO Matthew Shay said. — Denny Jacob

• An adage on Wall Street holds that it is unwise to play politics with your portfolio. Americans are increasingly doing just that.
• Nations are eyeing the G-7 summit in Canada this week as an opportunity to strike trade deals with President Trump—or at least build momentum to keep talking and ease tensions over tariffs.
• After the U.S. and China reached an agreement this past week to end the latest skirmish in their trade war, President Trump wrote on social media that he and Xi Jinping will “work closely together to open up China to American Trade.”
• China’s factories felt the pinch from tariffs last month despite a trade truce with Washington, while real estate woes weighed on investment, adding to pressure on Beijing to take bolder steps to shore up growth.
• For now, tensions over trade with the U.S. have eased, following an agreement in London to dial back the use of export controls, which each side is increasingly using to inflict economic pain and gain leverage over the other.
• The European Central Bank shouldn’t rush into cutting rates further, given that inflation in the eurozone has reached its target level, the president of Germany’s Bundesbank said Monday.
• It’s easy to think of Europe as the investment that time forgot. Even after this year’s strong performance, European investments have lagged far behind the U.S. for the past decade and more.
• Israel and Iran struck at each other’s energy facilities over the weekend, a significant escalation that brings the conflict closer to an industry vital to the global economy and markets.
• Oil prices gained again as Israel and Iran continued air attacks against each other, sustaining a sense of uncertainty across markets in Asia.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.