Ben Bernanke takes centre stage this week at a delicate juncture for global financial markets sorely in need of reassurance as mounting geopolitical tensions threaten to undermine investor confidence.
Against a backdrop of escalating violence in the Middle East, record oil prices and mounting inflationary pressures, the US Federal Reserve chairman is due to present his biannual testimony to the Senate banking committee on Wednesday.
Mr Bernanke faces the unenviable task of reassuring investors that the Fed can manage the increasingly difficult challenge of controlling inflation and moderating growth without pushing the US economy into recession.
US producer price data for June, due out tomorrow, are expected to show that pipeline inflationary pressures are still growing. The consensus forecast suggests the headline producer price index will rise from 4.5 per cent in May to 4.6 per cent, while the core PPI will jump from 1.5 per cent to 1.9 per cent.
Wednesday brings June's consumer price inflation data, which could determine whether US interest rates rise to 5½ per cent in August. For the core CPI measure, the monthly increase is a close call between 0.2 per cent and 0.3 per cent and that would push the year-on-year growth rate from 2.4 per cent in May to 2.6 per cent.
Evidence of the emerging slowdown in the US economy should come from industrial production data for June, due out today, and housing starts for June, due on Wednesday.
The consensus forecast suggests that year-on-year growth in industrial production will moderate from 4.3 per cent in May to 3.9 per cent.
