BU S INE S SMONDAY, MAY 23, 2016

LONDON: Investors will listen closely to aslew of US Federal Reserve policymakers inthe coming week to gauge how soon theywill raise interest rates, while Europeanfinance ministers look set to agree on moreaid for cash-strapped Greece. US policymak-ers were unexpectedly upbeat about theprospects for an increase in rates, the min-utes of their April meeting showed in thepast week. That sent the dollar as well as USand European bond yields higher.

Fed speakers in the last few days havefurther strengthened the markets’ view thatthe central bank will tighten policy soon,

leaving analysts to ponder whether thatmove will come in June or July.

“We still believe the Fed is more likely tocontinue waiting. But there is a consider-able r isk that a rate hike is imminent,”Commerzbank analysts said in a note toclients on Friday.

The main Fed speaker in the comingweek wi l l be Chai r Janet Ye l len , whoappears at a panel event hosted byHarvard University on Friday. Fed branchpres idents inc luding those f rom SanFrancisco, St. Louis, Dallas, Minneapolis allspeak earlier in the week.

The key precondition for a rate hike thatUS policy-setters outlined in April wassigns of economic growth picking up inthe second quarter and of employmentand inf lat ion f i rming up, the minutesshowed. With no second-quarter GDP datadue until the end of July, investors are thislikely to focus in the coming week on thesecond estimate of US first-quarter growthdue out on Friday.

The consensus view of analysts in a pre-liminary poll by Reuters is for growth to berevised up to 0.9 percent from the prelimi-nary reading of 0.5 percent. “The data sug-

gest that the US economy did not per-form quite as poorly in Q1 as previouslyassumed,” Commerzbank said. “There isincreasing evidence pointing to consid-erably stronger growth in Q2.”

One factor that could stay the Fed’shand next month, however, is concernover any fallout from Britain’s referen-dum on June 23 on whether to remainin the European Union. So far Britishdata has shown little sign of a ‘Brexit’effect on economic activity. The break-down of f i rst-quarter GDP due onThursday will be watched for any signsof an impact on business investment.

The Bank of Canada is widelyexpected to keep interest rates on holdon Wednesday despite a rise in theannual inflation rate in April. The bankhas said inflation is being influencedby temporary factors. In Europe, wherethe European Central Bank haspledged to keep policy ultra-loose for along time to come, Hungary is seencutting interest rates on Tuesday.

KEEPING GREECE AFLOATPreliminary purchasing managers’

indexes for France, Germany and theeurozone due out today morning areexpected to show steady if not stellargrowth in business activity. The main

focus in the shared-currency bloc inthe coming week, however, will be onTuesday’s Eurogroup meeting offinance ministers, who are likely toagree on fresh aid to enable Greece tokeep up with repayments to its credi-tors for the next few months. They mayalso forge a tentative and highly condi-tional plan to help Athens reprofile itsdebt burden to make it more sustain-able, euro zone officials preparing forthe talks said.

One key to the success of the talks iswhether the eurozone can iron out itsdif ferences with the InternationalMonetary Fund to ensure that the IMFthen participates in that plan. The twohave been struggl ing to agree onwhen to give Greece a break on itsfuture massive debt repayments. Theeuro zone wants to postpone a finaldecision on debt rel ief unti l 2018,while the IMF insists Greek debt repay-ment is unsustainable and investorsneed clarity now.

“Although f inal agreement maynot be forthcoming on Tuesday, weexpect that they will signal a definitedirection of travel to enable the IMFto come on board,” analysts at RBCCapital Markets said in a weekly noteto investors. — Reuters

Investors all ears as Fed policymakers ready to speakGLOBAL ECONOMY WEEK AHEAD