This week brings a full schedule of economic data releases, but everyone will be waiting for Wednesday’s announcement from the Federal Reserve Board to see whether the Fed cuts U.S. interest rates by 25 or 50 basis points.

The Fed decision is getting heady debate, with the consensus leaning toward a 25 bps cut. CIBC World Markets is more aggressive, calling for a 50 bps move. It says, “We now lean slightly towards a half point cut by the Fed, rather than our earlier call for two successive quarter point cuts, on the grounds that the Fed would rather not see the back up in yields that would come from ‘underwhelming’ the consensus.”

“We see the statement as retaining the last meeting’s split-decision, noting downside risks to inflation, but balanced to upside risks to growth. We expect the Federal Open Market Committee to eschew combining these apples and oranges into a single bias measure, which created some confusion last time,” CIBC notes.

TD Bank predicts that 50 bps is likeliest outcome, too. “So far, a rebound does not appear to be around the corner, with the third quarter due to begin in just 10 days. Still-shaky confidence continues to constrain consumer spending and business investment, increasing the risks that U.S. economic growth will not accelerate above potential — just over 3% — until the end of the year,” says TD. “

BMO Nesbitt Burns says that what the Fed says will be more important than what it does. The opinion in the market is not forceful about the choice between 25 basis points of easing and 50 bps, it notes.

Ahead of the big rate announcement, U.S. consumer confidence data is out Tuesday. Also, durable orders and new and existing home sales reports will be out on Wednesday. Real GDP is to be reported on Thursday. Personal income and spending numbers along with the Michigan consumer sentiment index will be out Friday.

CIBC comments that the other economic data will continue to point to improving economic conditions, “but equities are still facing risks during the warning season ahead of Q2 reporting.”

“We were hoping a fade in confidence could be avoided but we now believe that there was a flag-waving burst of confidence right after the war and that households are back in a show-me attitude about job growth,” says Nesbitt. “The other interesting report will be May durable goods orders. There have been hints of a pulse in U.S. manufacturing lately and we sense the interesting possibility of an upside surprise in the orders figures.”

This week’s major economic releases in Canada include April’s retail sales report out on Monday. “Given April’s weaker auto sales numbers, a contraction in this indicator is also expected,” comments RBC Financial. “The retail sales report should cap off a string of weak indicators with the April GDP report, out Friday, likely to post a decline.” Also, the leading indicator is out on Wednesday and industrial prices are reported on Friday.

“In Canada, we’e generally a month further back in data reports, and the final figures for April will look very ugly. Retailers had SARS, war, poor spring weather and weak auto sales to cope with, while GDP will also capture the declines in manufacturing and wholesaling already reported,” notes CIBC. “Should April come in any weaker than our –0.3% forecast, the stage would be set for a negative second quarter as a whole.”

Nesbitt also expects much of the bad news on the economy to be captured in this report, “as output was hammered in April by the distraction of the war in Iraq, the first SARS scare, harsh weather, and weak auto production. Against this backdrop, we look for a hefty 0.4% drop in monthly GDP, the worst performance since a 0.7% drop in September 2001.” Nesbitt indicates that the weak start to the quarter suggests that GDP will struggle to stay flat in Q2.

As for earnings releases, ATI reports on Wednesday, along with Research In Motion and Sobeys Inc. Empire Company and Richelieu Hardware report Thursday.