Bank of Canada Rate Decision And Japan’s GDP In Spotlight
The Bank of Canada (BoC) interest rate decision as well as the Japan GDP report for the second quarter of the year will be among the most important financial data releases for the rest of this week.
Saudi Arabian media sources reported that the Kingdom authorities decided to extend the voluntary cut of 1 million barrels per day until the end of the year. Brent jumped above $90 per barrel on the news for the first time since November 2022.
In the US, Cleveland’s Fed President Loretta Mester told Börsen-Zeitung reporters that “we might have to go a bit higher, that we might have to raise the policy rate a bit more.” The member of the Federal Reserve board mentioned that there is still time to evaluate the situation until the next meeting. Mester also added that “if we end up raising interest rates too much and the economy loses momentum more than necessary, we can lower interest rates.”
BoC Interest Rate Decision
The BoC’s board is expected to announce its interest rate decision on Wednesday afternoon. Market analysts suggest that the central bank of Canada will likely leave interest rates unchanged after its board meeting. Financial data coming from Canada suggest the local economy has begun to slow down after 10 rate increases over a 16-month span.
Economists at ING wrote in a report that “Canada’s economy surprisingly contracted in the second quarter with consumer spending slowing sharply and residential investment collapsing. Together with a cooling labour market, this should ease the Bank of Canada's inflation fears and lead to a no-change decision on 6 Sep.”
China and Eurozone Facing Economic Slowdown?
In other news, Goldman Sachs analysts fear that China could be facing a “more persistent slowdown,” comparing it to the one that has affected the Japanese economy in the last few years. According to their report, “China faces short- and long-term challenges from its property market and demographic outlook. While a ‘sudden stop’ remains unlikely, we see risks of a more persistent Japan-style slowdown.”
Slowdown seems to be a keyword not only for China but also for the eurozone as the ECB’s board member Francois Villeroy de Galhau said that “there is slowdown but no recession. We must bring inflation down to 2% level between now and 2025. In our fight against inflation, maintaining rates for a sufficiently long period now counts for more than further significant rises.”
Japan GDP Q2 2023 Report
On Thursday night, the Japanese government will publish data regarding the economy’s growth in the second quarter of 2023. Economists suggest that the Japanese GDP growth is likely to come in at 1.3% on a quarterly basis and at 5.5% on an annualised basis.
Preliminary data released three weeks ago showed that the world's third largest economy saw its GDP grow by an annualised 6% in the period. Economists had noted that the weak Japanese yen boosted exports while falling commodity prices also played a role in the economy’s significant expansion.
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