The EU Council will hold a two-day meeting, which will discuss the appointments to the EU’s top posts (the European Commission President, notably). It will also draft the agenda for the incoming European Commission. Meanwhile, the ECB will release its economic bulletin, which may include some interesting analyses on the state of the eurozone economy. Separately, the European Commission will release the bloc’s sentiment index for June. In May, economic sentiment in the eurozone increased to -6.5 from -7.3 in the previous month. Although this reading was well below its cyclical high of -3.4 (which it touched in December 2017), the index is still running above its long-term average of -10.5, which is testament to the relative strength of the labour market. It is Iikely to muddle through going forward. In the UK, retail sales should enjoy a modest boost in May, after coming in flat in the previous month. Overall, retail sales growth probably moderated in Q2, following a strong performance in Q1 (1.6% quarter-on-quarter). Consumption is likely to remain the main driver of growth this year, reflecting a solid labour market. A number of central banks will hold their monetary policy meetings. Central banks in Indonesia, Thailand and the Philippines are likely to step up their dovish rhetoric following the recent escalation of US-China trade tensions. Interest rate cuts are possible – and if central banks do not act this month, they are likely to lower rates in Q3. The Bank of Japan (BoJ) will also hold its monetary policy meeting. It will probably confirm its QQE policy with yield curve control, pinning the policy rate at -0.1% and the 10-year yield at zero. The BoJ is unlikely to consider changes to monetary policy this year ahead of the planned consumption tax hike in October. Meanwhile, the Bank of England (BoE) should stand pat on interest rates. However, it will probably strike a cautious tone as recent economic developments have been slightly weaker than it had previously expected in its May Inflation Report. The UK’s economic activity data was extremely weak in April, suggesting that GDP may contract in Q2 (compared to the BoE’s forecast of 0.2% quarter-on-quarter growth and down from an increase of 0.5% in Q1). In addition, inflation came in slightly weaker than the BoE expected in April, with the core component running below target. Employment growth has also slowed somewhat, and wage inflation has come off its recent highs. More fundamentally, Brexit uncertainty has continued to weigh on the UK’s economic outlook, while downside risks from external sources have also increased due to the recent re-intensification of international trade tensions. The BoE will probably maintain a weak and unconvincing tightening bias, reiterating that a few rate hikes will be appropriate, if Brexit is resolved in an orderly way. But for now, a firm wait-and-see mode will prevail. Elsewhere, Norway’s central bank is likely to buck the dovish central bank trend. It is likely to hike interest rates by 25bps to 1.25%, reflecting strong economic activity data. In addition, inflation has developed largely in line with the Norges Bank’s expectations.