It is expected that the two major central banks meetings for this week will conclude without any changes in monetary policies. Each event is unique in its own way.
It is time to end the global cycle of rate increases. Markets were pricing in a steady decline in rates for the first six months of 2018. Inflation has been persistent in many countries. Accordingly, the market is adjusting to future hikes before a pause. In this context, however, the two main central banks that have not raised rates are of particular interest.
How long will BOC’s pause last?
Because of the economic similarities between Canada’s economy and the US, the BOC is especially interesting. Since the BOC typically meets before the Fed and operates on the same economic theories, often it will “lead” the Fed in policy decisions. Markets can react to BOC actions by moving them, as they look for clues about what the Fed will do.
Canada’s situation is slightly different than that of the US, however. Inflation has been falling both at the headline rate and at the core. The economy is also seen as a bit less robust than its southern neighbor’s….
