What to expect from central bank decisions this week

[MongiIG]

This week, three major central banks are due to decide on their monetary policy path. First on Tuesday, the Bank of Japan, which will also publish its quarterly outlook report.

 Written by: Angela Barnes | Financial presenter/producer, London | Publication date: Monday 22 January 2024 11:32

It will be followed by the Bank of Canada’s decision on Wednesday and the European Central Bank’s update on Thursday. IGTV’s Angela Barnes looks at what the market is expecting.

 

The Bank of Japan and the Bank of Canada

This week, three big banks - the Bank of Japan, the Bank of Canada, and the European Central Bank (ECB) - are going to make some important decisions about their money plans. Many people in the market think that the Bank of Japan will lower interest rates, which could be a sign that other banks might follow and lower rates too. But the people in charge have been saying that they need to be careful and work together so they don't cause any big problems by lowering rates too soon. The Bank of Canada is expected to keep their rates at 5% because there has been a recent increase in something called the headline CPI growth, which is a way to measure the cost of things going up. Inflation, which means when prices go up, is expected to be a little higher than what the bank wants until around 2024.

European Cenral Bank

On the other hand, the European Central Bank (ECB) is planning to keep their main interest rate at 4.5% and another rate at 4%. The President of the ECB, Christine Lagarde, has been hinting that they might lower rates sometime in the summer. Since January 19th, the value of the euro compared to the US dollar has been going up. And since Friday, the value of the Japanese yen compared to the US dollar has been going down. This shows that people think the Bank of Japan will keep doing what it's been doing with its money policy, which is called ultra-delicate.

 

 

 

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