Focus On Jackson Hole Symposium, Reuters Poll Sees BoJ Raising Rates In 2024

While the rest of this week does not include significant economic data releases, investors will be focusing on the Jackson Hole Symposium event and the Federal Open Market Committee meeting minutes due to be published today.

The Federal Reserve’s head Jerome Powell as well as the Bank of England’s leader Andrew Bailey will be among the speakers at the Jackson Hole Symposium so market analysts will scrutinise their comments regarding future monetary policy moves.

Riksbank Cuts Interest Rates

Riksbank, Sweden’s central bank cut its rates by 0.25% in line with market expectations. The bank’s board noted that “inflation is in the process of stabilising at the target and economic activity is weak. The Executive Board has decided to cut the policy rate by 0.25 percentage points to 3.5 per cent. If the inflation outlook remains the same, the policy rate can be cut two or three more times this year, which is somewhat faster than the Executive Board assessed in June."

Fed’s Bowman Says US Inflation Still Too High

Federal Reserve (Fed) board member Michelle Bowman noted that despite the recent inflation drop, price growth levels remain well-elevated compared to the Fed’s target.

Bowman said that there are still upside risks to inflation and added that “should incoming data show inflation is moving sustainably toward the target, it will become appropriate to gradually lower rates to prevent becoming overly restrictive.”

The Fed’s board member also noted that “wage gains remain above the pace consistent with our inflation goal,” and mentioned that “it is possible that the strength of hiring has been overstated and that rise in the unemployment rate is exaggerating signs of cooling.”

Reuters Poll Sees BoJ Raising Rates By Year’s End

A Reuters poll conducted between August 13-19 showed that 57% of economists expect the BoJ to raise borrowing costs once again by the end of 2024. Most economists suggest that Japan’s central bank could increase rates by 25 basis points.

Economists at Itochu Research Institute told Reuters that in their opinion the monetary policy implemented by the BoJ is extremely accommodative and that “the BOJ will continue to raise interest rates toward the neutral rate as long as the 2% price stability target is expected to be achieved.”

Canadian CPI Inflation Hits 40-Month Low

Statistics Canada announced that the country’s consumer price index (CPI) rose 2.5% on a year-over-year basis in July, down from 2.7% in the year to June. That’s the slowest increase recorded since March 2021.

Although gas prices rose, cheaper prices of cars, electricity and travel costs fell driving the index lower. “The decline was largely due to a base-year effect, as prices for travel tours rose 15.5% month over month in July 2023 during the first summer without restrictions related to the COVID-19 pandemic. Similarly, prices for traveller accommodation (-3.7%) and air transportation (-2.7%) fell year over year in July,” said the accompanying report by Statistics Canada.

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