RBA and BOC to announce interest rate decisions this week

Both Central banks are expected to keep rates unchanged in the face of growth concerns

By Nadia Elbilassy | @Nadia Elbilassy | 4 September 2023

  • Markets speculate the end term of tightening cycles for most central banks on signs of weakening economy

  • Full calendar week with China’s Caixin services PMI up next and China’s CPI at end of week

  • Markets gear up for Central bank's decision month

RBA to keep rates unchanged at 4.10%

Under the spotlight is the RBA’s decision tomorrow morning, with expectations of keeping rates unchanged for the 3rd consecutive month, keeping rates at 4.10%.

The bank announced that despite controlling inflation is a primary objective, So is sustaining economic growth. Especially that higher borrowing costs have led to a slowdown in demand.

Inflation did slowdown marginally in Australia to 4.9% compared to the December 2022 reading of 8.4%. Reflecting the banks victory in controlling inflation thus far. Hence why expectations are leaning towards the bank keeping the policy unchanged. Whilst in 2024 they could start reducing interest rates.

BOC likely to keep rates at 5.00%

Other than the RBA decision this week, investors are tuning in BOC decision on Wednesday, whereas markets also expect to keep rates unchanged for the first time since April at 5.00%.

The bank may keep the interest rate at this level until at least the end of March 2024. These expectations come after recent economic data showed a slowdown in inflation growth, which rose by 3.3%, while the bank targets inflation in the range of 2% to 3%. Besides due to the slowing down Canada is currently seeing, it might be best to keep the policy unchanged otherwise it will lead to further weakening of the economy.