The global market is preparing for central bank meetings during a week full of important economic data and events, and is following up on the decisions of the central banks that will continue throughout the month of June. We are waiting for the Bank of Canada meeting tomorrow and then on Thursday the European Central Bank to announce the future monetary policy approach.
Why should we care about the Bank of Canada meeting?
The Bank of Canada’s interest rate decision reflects Canada’s inflation and growth rates, as well as the risks facing the Canadian economy. This statement helps to communicate with investors to learn about the latest monetary policy decisions, especially decisions related to interest rates.
Following the Bank of Canada’s Monetary Policy Committee meeting, the interest statement is issued, which is one of the most important tools for communicating with investors regarding monetary policy. Through it, they can learn about recent decisions related to interest rates and economists’ comments on the economic conditions that affected their decisions, in addition to their economic aspirations for the future. Traders are looking forward to changes in interest rates because they are one of the most important factors affecting the value of the currency.
A look at the economic situation
The economic data in Canada varied over the past period, which puts the Bank of Canada in a state of uncertainty about the future of the Canadian economy, and therefore a change in the monetary policy stance excludes this meeting:
retail sales
The data showed an improvement in retail sales during the month of March. According to the data, the retail sales index rose during that period by 3.6%, better than expectations to record an increase of about 2.3% only. Also, the retail sales index, with its core value, recorded a better than expected reading in March, as the index showed an increase of 4.3%, against expectations that the index would record an increase of 2.3%. This, and the previous reading of the index had witnessed an increase of 4.8% during last February.
the growth
Growth data in Canada improved during the month of March, as the GDP index rose by 1.1%, better than market expectations, which indicated that the index rose by about 1.0%. The last reading of the index, in February, recorded an increase of only 0.4%, and therefore the reading of the index during last March became the best since August 2020.
Employment and unemployment
The data showed that the employment change index declined strongly during the month of May, as the economy fell by about 68 thousand jobs, which is more than the market expectations of a decrease in the economy’s jobs by only -23.5 thousand jobs. Unemployment rates also increased from 8.1% to 8.2% during the same period.
What do we expect from tomorrow’s decisions?
The Bank of Canada releases its interest and monetary policy decision tomorrow, Wednesday at 2:00 PM GMT. With markets expecting to keep interest rates unchanged at 0.25%. The interest statement will be followed by the Bank of Canada Governor’s press conference, to comment on the contents of the rate decision.
