Inflation pain over? By Reuters

(Reuters) -Inflation data from the United States, Europe and Japan will frame the week with key PMI numbers due in China, and policymakers are gathering to debate how to restart the stuttering economic growth engine that is global trade.

Meanwhile Ukraine marks the second anniversary of Russia’s invasion.

Here’s your week ahead in world markets from Rae Wee in Singapore, Lewis Krauskopf in New York, and Dhara Ranasinghe, Mark John and Karin Strohecker in London.

1/OUTSTRIPPING EXPECTATIONS

U.S. inflation is back in the spotlight on Thursday, with the personal consumption expenditures (PCE) price index set to give investors another look at an economy that has been stronger than many had expected.

Recent data such as consumer prices, producer prices and employment show the world’s largest economy continues to hum along despite months of elevated interest rates. One upshot has been an increasingly cautious Fed pushing back on expectations of an imminent rate cut. Bond yields have rebounded and the dollar has edged higher.

Economists polled by Reuters expect a 0.3% increase for January after 0.2% in the previous month. A stronger-than-expected PCE number could further whittle away at market rate cut bets.

2/ HAPPY DAYS

The European Central Bank must be pleased, surely?

Upcoming flash February numbers on March 1 should show euro area inflation, which soared to double-digits in 2022, is moving back towards its 2% target. The reading slipped to 2.8% in January from 2.9% in December and is cooling quickly with growth anaemic and retreating energy prices.

The composite reading will follow national data from Germany, France and Spain – all out before the ECB meeting on March 7. ECB vice-president Luis de Guindos says time and more data are needed before policymakers can say comfortably that record-high rates have done their job. Wage growth meanwhile has slowed but remains above levels consistent with 2% inflation.

So, it is not quite happy days as rate setters navigate that tricky ground between keeping rates high enough to contain inflation while timing a first rate cut just right.

3/ A TOUGH ACT

Policymakers in China and Japan are facing a tough battle to improve the dour growth outlook in their economies.

Inflation figures for Japan are due on Tuesday – and expectations that consumer prices have cooled again in January might give the Bank of Japan (BOJ) one less reason to exit negative rates this year. The central bank faces a recessionary backdrop and sluggish consumer spending, but maintaining ultra-easy policy would mean more pain for the yen.

Over in China, authorities have grown increasingly desperate to shore up a fragile economic recovery after delivering the biggest ever reduction in the benchmark mortgage rate and ramping up regulatory pressure to revive an ailing stock market. Friday’s PMI data will provide more clarity on how effective Beijing’s support measures have been. In the meantime, though, investors remain unimpressed.

4/ TRADING NOWHERE

Rising protectionism and geopolitical conflict have cast a pall over world commerce, which last year grew just 0.2% – its weakest rate in five decades outside global recessions.

What can the World Trade Organization, which starts its minister-level meeting in Abu Dhabi on Monday, do about it? Very little, most observers conclude. The body is hampered by disputes among member countries and above all by domestic politics that have turned sour on the free trade, which the WTO was set up to promote.

Ahead of November U.S. elections, there is little chance of Washington removing its roadblock on new appointments to the WTO’s top appeals bench – meaning its trade dispute arbitration body will remain idle.

Meanwhile, prospects for deals in major sectors, such as farming and fisheries remain dim – meaning trade cannot be counted on to drive the global economy for the foreseeable future.

5/ OUTNUMBERED, OUTGUNNED

Saturday marked the second anniversary of Russia’s invasion of Ukraine – a conflict that has shaken and shaped not only the country itself but global politics, commodity markets and economies like no other in recent history. Prices for energy and many commodities are back below pre-war levels, though gold – an inflation hedge – is above February 2022 prices.

Outgunned, outnumbered and facing growing concerns over the prospect of international aid, Ukraine is coming under increasing pressure. The International Monetary Fund warns that “timely support” for Ukraine from the U.S. and other international donors is needed to ensure the country’s fiscal viability.

Heads of the Group of Seven major democracies on Saturday pledged to stand by war-weary Ukraine, and Western leaders traveled to Kyiv to show solidarity.

Meanwhile Russia, already severed from global financial system following swathes of sanctions, is facing fresh curbs from Washington, Britain and others following the death of opposition leader Alexei Navalny and the war entering its third

year.