Investing.com - The latest interest rate decision by the U.S. Federal Reserve will be the highlight of the week’s activity, although there are also meetings from a number of other central banks. U.S. President Donald Trump is set to meet Russian President Vladimir Putin to discuss peace in Ukraine, while the German debt ceiling vote and the volatility on Wall Street will also be in focus.
1. Fed policy-setting meeting due
Investors face a Federal Reserve policy-setting meeting this week, as investors look for hints about further interest rate cuts that could restore some calm after the recent slide in stocks.
The U.S. central bank is widely expected to hold interest rates steady on Wednesday, but this meeting comes as Wall Street is increasingly worried about an economic slowdown, especially given the tariff war instigated by U.S. President Donald Trump.
Thus investors will be looking for signs the Fed may be preparing to offer up more interest rate cuts, if the economy continues to deteriorate.
The Fed, however, is stuck between a rock and a hard place, struggling to balance a need to provide support to a potentially cooling labor market while reining in price pressures.
"Rather than double down with additional rate reductions...the Committee is presumably better suited to maintain its ’wait and see’ approach, at least for now," Stifel economists said in a note.
2. Trump to meet with Putin over Ukraine
U.S. President Donald Trump is set to speak to Russian President Vladimir Putin on Tuesday and discuss ending the war in Ukraine, after talks between officials from both sides over the weekend.
Ukraine’s President Volodymyr Zelenskiy last week accepted the U.S. proposal for a 30-day interim ceasefire, putting the onus on Russia to cede to Trump’s demands.
That said, Zelenskiy has consistently said that the sovereignty of his country is not negotiable and that Russia must surrender the territory it has seized.
Russia, on the flip side, will be looking for guarantees in any peace deal that Ukraine will drop its NATO ambitions, that Moscow keeps control of all Ukrainian territory seized, and that Western sanctions are eased.
3. Wall Street declines
Wall Street will also be in focus this week, as investors fret that the uncertainty surrounding the Trump administration’s trade policies could lead to a severe economic slowdown.
Both U.S. and global economic growth is set to be lower than previously projected, according to the latest estimates from the Organisation for Economic Co-operation and Development.
The OECD said that global GDP growth is projected to moderate from 3.2% in 2024, to 3.1% in 2025 and 3.0% in 2026, while annual GDP growth in the United States is projected to slow from its strong recent pace, to be 2.2% in 2025 and 1.6% in 2026.
The three major indices closed higher on Friday, but still posted weekly declines. The Dow Jones Industrial Average dropped about 3.1%, its worst week since March 2023, while the S&P 500 and Nasdaq each fell over 2%, extending their losing streak to a fourth week.
The Nasdaq Composite sank deeper into correction territory last week, while the S&P 500 briefly dipped into a correction as well, before closing above that level.
4. German debt ceiling decision
Germany’s parliamentary budget committee on Sunday approved plans for the massive increase in state borrowing to bolster defence and revive economic growth, placing Tuesday’s parliamentary vote firmly in focus.
The bill, which includes a E500 billion fund for infrastructure and changes to borrowing rules, will require a two-thirds majority.
The proposals mark one of the biggest political changes in Germany since the fall of the Berlin Wall in 1989.
According to UBS, these measures could lead to a cumulative 20% increase in government spending over the next decade, which could bolster consumer and business confidence even before funds are fully deployed.
5. More central bank meetings
Apart from the U.S. Federal Reserve, there are a number of other major central banks due to hold policy-setting meetings this week - including the Bank of England, the Swiss National Bank, and Sweden’s Riksbank.
The BoE is set to hold its base rate at 4.5% on Thursday, with the policymakers having to cope with rising inflation as well as the economic uncertainty generated by the Trump administration’s tariffs and upcoming tax rises.
More easing is likely later in the year, as the Bank of England has been gradually cutting borrowing costs since August last year, putting the focus on the vote split between hawks and doves.
The Riksbank is also likely to hold rates steady on Thursday - likely marking the end of the easing cycle in Sweden which has been among the most aggressive of developed market central banks.
The SNB, on the other hand, is widely expected to cut its benchmark rate to just 0.25%, dragging its key rate closer towards negative territory once more.
The SNB used negative interest rates for nearly eight years, from December 2014, but exited the policy in September 2022 to combat inflation.