This week, markets are focused on expected interest rate moves by a number of global central banks, including the US Federal Reserve and the Bank of Canada, which are expected to cut interest rates due to slowing growth and a deteriorating labor market, while other G7 countries remain cautious, with Japan maintaining a steady monetary policy.
Meanwhile, the world is watching closely for US President Donald Trump’s moves on trade during his Asian tour.
According to Bloomberg, North America will likely be the focus of monetary policy decisions, with four of the largest central banks expected to make their decisions in less than 24 hours, starting on Wednesday, when both the US Federal Reserve and the Bank of Canada are expected to announce a quarter-point cut, a widely anticipated move.
This comes as the Bank of Japan is expected to keep its monetary policy unchanged next Thursday, despite its gradual approach to its first possible interest rate hike in years, while European Central Bank officials confirmed that their meeting will not result in any further easing at present, and the Bank of England will keep interest rates at the same levels next week pending the announcement of the government budget.
The move in North America reflects growing concerns about slowing growth and deteriorating labor market conditions on both sides of the US-Canadian border, justifying the immediate action, even though monetary policymakers remain concerned about inflationary pressures.
In the rest of the G7 countries, caution still prevails, as officials monitor the impact of US President Donald Trump's tariffs on global growth, along with assessing the strength of domestic consumer prices.
With the exception of Japan’s gradual move towards tightening monetary policy, the general tendency in the group remains towards lowering interest rates, but without haste.
The picture is expected to become clearer at the final round of meetings this year in December.
Bloomberg Economics economists Anna Wong, Stuart Ball, Eliza Winger, Estelle Ou, Chris Collins, and Troy Deary said: “Federal Reserve Chair Jerome Powell is likely to describe the cut as a precautionary measure against downside risks to jobs. Although the U.S. government shutdown disrupted the release of official data, alternative data points to continued risks to the labor market, and there are no strong reasons to revise the September forecast, keeping the possibility of another cut in December alive.”
Key data to watch this week includes inflation figures in Australia and the Eurozone, purchasing managers' indices in China, and interest rate decisions in Chile and Colombia.
Meanwhile, attention will be focused on the latest moves by US President Donald Trump on trade, as he is scheduled to meet with a number of Asian leaders this week during his three-country tour of the region, and will meet with Chinese President Xi Jinping on Thursday, in a meeting expected to be widely followed.
His tour coincides with the ASEAN summit in Malaysia, the Asia-Pacific Economic Cooperation (APEC) summit in South Korea, and he will also travel to Tokyo.