Bank of Canada Interest Rate Decision And Japan’s GDP In Spotlight

September 06, 2023 21:34

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.

Does trading on macroeconomic news interest you? Learn how this approach works with our free webinars. Meet and interact with expert traders. Watch and learn from live trading sessions.

Free trading webinars

Tune into live webinars hosted by our experienced traders

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.

Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.