At the middle of this week Canada announced its decision over maintaining the overnight rate at the 0.5% level, as was to be expected. The economic policy rate remained 0.75% and the deposit rate 0.25%. As for the inflation, BoC declared that the preferred gauge – the CPI (Consumer’s Price Index) remained once again at the bottom of the targeted range, outlooks remaining favorable. In the press release there were also stated the main reasons for this continuity in the low-prices trend, which in a concise matter can be represented by the uncertain grow prospects for China’s economy as well as other emergent markets. Although the overall risks, BoC declared itself satisfied with the current state of Canada’s economic path.
In New Zeeland, the Reserve Bank announced yesterday a reduction of the OCR (Official Cash Rate), trimming it with 25 basis points to the level of 3.0% and also making annotations about a probable future cut down. The explanation for the present decision rests in the targeted CPI, which needs to keep the inflation in the 2% area. If the measure seems insufficient, further cuts will take place depending on the state of the economy.
Right next door, the Aussie gets hit by the new job report about Australia’s situation. The unemployment came out much over expectations, reading 17.4K – forecasts talked about 5K. Sentiment is the other way around when speaking about the unemployment rate: it reads 6.2%, under last month’s 6.3%, surprising most economic actors, which expected a much higher level; this took off a bit a pressure from the Aussie. When this news was released, it was also published the Shanghai Composite Index – opening lower with 1.9%, the Hang Seng Index – opening lower with 2.2%, and Nikkei – opening 3.7% lower. In the same time AUD/USD spiked above 0.70 level and this one was due to China CPI Y/Y 2.0% vs 1.8%, 0.5% M/M vs 0.4%.
BoE’s (Bank of England) stand regarding a rate hike is unchanged according to the last minutes published, the only one in favor being, as expected, Ian McCafferty. The minutes also brought forward the uncertainty of BoE regarding what impact the strong GPB can have over inflation. Regardless about these worries, prospects for the British economy remain positive according to policymakers. The recent black stain of China’s economic contraction has not altered their ambition of a rate hike knocking strolling slowly but decisively.
