Bank Of Canada To Decide On Rates, Tesla’s Q2 Earnings Disappoint

The Bank of Canada (BoC) will decide on interest rates later today with analysts suggesting that it could move forward with lowering borrowing costs to help consumers struggling with their finances.

Tesla disappointed market analysts as its earnings report for the second quarter of the year missed expectations.

Bank of Canada Interest Rate Decision

On Wednesday, the BoC is expected to announce its decision on interest rates. Economists suggest that the Canadian central bank governing board could cut borrowing costs by 25 basis points. If the forecast is confirmed, this would be the second consecutive rate cut by the BoC which leads the way in front of most major banks when it comes to monetary policy unwinding.

The BoC’s Governor Tiff Macklem said in June that Canadians can expect a gradual pace of rate cuts going forward, while the bank’s council will be monitoring various reports and data to have a better view of the economy’s condition. As headline inflation dropped to 2.7% in June, analysts suggest that there might be space for some rate reduction.

A survey conducted by the MNP Consumer Debt Index showed that more than 60% of Canadians want to see interest rates going down as consumer prices and expenses such as mortgages went up in the last two years.

Reuters Poll Sees Two Fed Rate Cuts This Year

A Reuters poll among economists showed that 73 of 100 forecast two 25-basis-point cuts this year, with the percentage being 13% higher than the one shown in June’s similar survey.  

82% of economists now see a rate cut in September with the next one likely to take place in December. The Reuters report based on the poll suggests that “the Fed will cut rates once in each quarter through 2025, taking the federal funds rate to the 3.75%-4.00% range by the end of 2025, according to median forecasts in the survey.”

Tesla Earnings Miss Expectations, Alphabet’s YouTube Ad Revenue Drops

Tesla published its earnings report for the second quarter of the year. The report wasn’t good news for the US electric vehicle manufacturer as it was the fourth time in a row that Tesla missed expectations with earnings coming 17% lower than anticipated and recorded the largest drop miss in the last 3 years.

On the other hand, Alphabet, Google’s parent company, reported total revenue of $84.74 billion during the second quarter, up 14% on an annualised basis. Commenting on the earnings report, CEO Sundar Pichai said: "Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud."

However, investors stressed that YouTube’s ad revenue came in lower than expected, adding that Google’s target to reach $100 billion revenue from Google Cloud and YouTube services by the end of 2024 may be hard to get.

Test Your Trading Strategies on an Admirals Risk-Free Demo Account

Are you interested in practising trading without risking your funds? A demo trading account from Admirals allows you to do just that, whilst trading in realistic market conditions. Click the banner below to open a demo account today:

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.