Bank of Canada To Decide On Interest Rates, Australian GDP In Focus

The week is already on the go with economists focusing on the Bank of Canada (BoC) interest rate decision and the Australian GDP growth report for the first quarter of the year.

In the US, Goldman Sachs vice chairman and formed Federal Reserve board members, Robert Kaplan, told CNBC reporters that he does not see a rate cut this summer unless something “shocking” happens. Kaplan noted that “I think September is the first month where a cut is a possibility, but I think the Fed would need to see at least a few more months of improvement in inflation. If they see it, September is possible.”

In Japan, the Bank of Japan (BoJ)Governor, Kazuo Ueda, said that if underlying inflation would move as the bank forecasts, the board would be ready to adjust its monetary policy.

Australia GDP Q1 2024 Report

On Wednesday, the Australian Bureau of Statistics (ABS) is expected to release data regarding the Australian GDP in the first quarter of 2024. According to forecasts, the Australian economy growth rate could come in at 1.2% on an annualised basis and 0.2% on a quarterly basis. The year-on-year growth figure is likely to indicate a drop from 1.5% recorded in the fourth quarter of 2023.

NAB’s economists are not very optimistic when it comes to the Australian economy’s performance as they forecast that no growth was recorded in the March quarter. As a result, they suggest that the Reserve Bank of Australia would refrain from tightening its monetary policy as consumers also struggle from high costs of living. In their report, they mention: “For now, the weakness on the activity side is likely to see the RBA hold off on any further increases in the cash rate as it looks forward to the downstream impacts of slower growth and balances the risk of a faster deterioration in the labour market.”

BoC Interest Rate Decision

The BoC’s governing board will convene on Wednesday to decide on monetary policy issues and set interest rates.  The BoC’s upcoming announcement has sparked some economists’ expectations who suggest that the central bank could lower its benchmark interest rate by 25 basis points. 

Economists at RBC Economics believe that the BoC will reduce rates and note in their forward guidance report that “at the last interest rate decision, Governor Tiff Macklem said the conditions for lower interest rates appeared to be in place but that the central bank wanted to see more evidence that inflation pressures are trending lower. The two CPI reports since then have both surprised on the downside and should provide the BoC with enough evidence. Still, while the case for interest rate cuts in Canada is relatively clear—the BoC will likely maintain a cautious tone about the pace of additional cuts.”

OPEC+ Extends Crude Oil Production Cuts Into 2025

The Organization of the Petroleum Exporting Countries and its allies known as OPEC+, agreed to extend their official crude output cuts into 2025. The decision came in line with analysts’ forecasts that the alliance would likely extend its existing cuts.

However, according to a Reuters report published today, oil prices fell by 1% as investors were worried that reduced demand from the US may generate an uptick in supply as the year comes near to its close.

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