BOC interest rate decision
On Wednesday, the 25th of October, The Bank of Canada will release its most recent economic forecast in its quarterly monetary policy report, alongside an interest rate decision, followed by a news conference.
Numerous analysts are expecting the BOC to keep base rates unchanged on Wednesday, following two hikes in July and September. Policymakers are most probably going to monitor changes in the landscape, most importantly the risk and impact of the new NAFTA deal.
Meanwhile downbeat retail sale and subdued inflation also suggest the central bank will hold rates and monitor how the economy is reacting to the hikes in July and September. Retail sales fell by 0.3 percent in August, below the median forecast of a 0.5 percent gain.
Regarding inflation, Canadian consumer price inflation (CPI) in September rose to levels last seen in April, Annual inflation advanced to 1.6 percent, compared to economist expectation of 1.7 percent, Inflation found support from rising gasoline prices. However, annual inflation excluding gas remained subdued at 1.1 percent.
In conclusion, analysts will focus on the growth forecast, with the consensus that the central bank will keep rates on hold and monitor future economic data to determine if and when to hike rates once more.
ECB interest rate decision
The European Central Bank is going to make a decision regarding its base rate on Thursday the 26th of October. A vital event for investors, as the ECB is expected to announce the tapering of 60-billion-euro bond purchasing program.
Two weeks prior to the monetary policy meeting, the head of the European Central Bank reaffirmed his pledge to maintain interest rate at current levels.
Mario Draghi’s words shattered Germany’s hopes of the end of negative/zero interest rate era. With the German policymakers arguing that ECB’s policy has bankrolled indebted country in the Eurozone, discouraging returns for investors, and stimulating price bubbles in the more prosperous nations of Europe.
Analyst and economist are expecting the European central bank to announce that it will slash its monthly asset purchases from 60 billion euro to 30 billion-euro as of January 2018 and that it will commit to nine months of monthly bond purchasing at the new rate. Moreover, the central bank will decide how to proceed after the nine-month period. And will likely keep its QE bias.
Furthermore, according to UBS latest report, Analyst in the firm expect the ECB to keep rates unchanged and will hike only after the termination of its quantitative easing program, most likely as of 2019.
To conclude, the Eurozone is on track to recovery. However, inflation remains below the ECB’s target of 2 percent. Thus, the central bank will continue taking an accommodative policy approach and keep rates unchanged while gradually trimming its month asset purchasing program.