Expectations of Interest Rate Cuts by Central Banks in the U.S. and Canada

SadaNews - Market attention this week turns to Washington and Ottawa, where both central banks in the United States and Canada are expected to cut interest rates, while the other G7 countries remain on standby.

Expected Interest Rate Decisions

North America is likely to be the focus of monetary policy decisions, as four of the largest central banks are expected to announce their decisions within less than 24 hours, starting on Wednesday, when both the U.S. Federal Reserve and the Bank of Canada are anticipated to announce a quarter-point cut, a widely expected move.

Key Insights from the U.S. Inflation Report for September

The Bank of Japan is expected to keep its monetary policy unchanged next Thursday, despite its gradual approach to a potential first rate hike in years. Meanwhile, officials from the European Central Bank have confirmed that their meeting will not result in any additional easing at this time. As for the Bank of England, it will maintain interest rates at their current levels next week, awaiting the announcement of the government budget.

Slow Growth and Deteriorating Labor Market

The movement in North America reflects growing concerns about slowing growth and deteriorating labor market conditions on both sides of the U.S.-Canada border, which justifies immediate action, despite ongoing concerns among monetary policymakers about inflationary pressures.

In the other G7 countries, caution prevails as officials monitor the impact of tariffs imposed by former President Donald Trump on global growth, alongside assessing the strength of domestic consumer prices.

Except for Japan's gradual move towards tightening monetary policy, the general trend in the group is towards lowering interest rates, but without haste. The picture is expected to become clearer during the last round of meetings for this year in December.

Bloomberg Economics Experts' Opinion:

Analysts from "Bloomberg Economics" stated that "Federal Reserve Chairman Jerome Powell is likely to describe the cut as a precautionary measure against negative job risks. Although the U.S. government shutdown has disrupted official data releases, alternative data indicates continued risks in the labor market. There are no strong reasons to modify September's predictions, keeping the possibility of another cut in December alive."

-Anna Wong, Stuart Paul, Eliza Winger, Estelle Owo, Chris Collins, and Troy Dary, economists.

Upcoming Economic Data

Key data expected this week includes inflation figures from Australia and the Eurozone, purchasing managers' indices from China, and interest rate decisions from Chile and Colombia.

At the same time, attention will turn to the latest moves by President Donald Trump on trade, as he is scheduled to meet several Asian leaders this week during his tour, which includes three countries in the region, while he will meet with Chinese President Xi Jinping on Thursday in a meeting expected to receive significant attention.

Trump Hopes to Reach a "Comprehensive" Agreement with China During His Meeting with Xi

His tour coincides with the ASEAN summit in Malaysia and the APEC Economic Cooperation Forum summit in South Korea, and he will also visit Tokyo.