Online Reporter
The first US interest rate cut since Donald Trump became president again is likely to seize the spotlight in a week that will determine policy settings for half of the world’s 10 most-traded currencies.
Starting with the Bank of Canada and then the Federal Reserve on Wednesday, shifting to the Bank of England the following day, and ending with the Bank of Japan, central banks may either adjust borrowing costs, prime investors for their intentions in the year’s final quarter, or both.
By the end of the week, rates affecting two-fifths of the global economy, including four of the Group of Seven industrialised nations, will have been tweaked or reaffirmed. A US rate cut long sought by Trump’s White House is expected to feature prominently.
The standoff over Fed policy, pitting Trump’s strident calls for lower borrowing costs against Chair Jerome Powell’s concerns about tariff-driven inflation, hangs over the meeting. Recent signs of weakening in the labour market have, however, given a green light for what most economists expect will be a quarter-point rate cut.
What Bloomberg Economics Says:
“We expect the FOMC to cut rates by 25 basis points. That won’t be because economic data on both sides of Fed’s mandate – price stability and full employment – warrant it.
“Rather, the markets expect a rate cut, the White House wants it — and we think Powell is doing what he sees as needed to fend off further threats to the Fed’s independence.”
—Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou and Chris G. Collins, economists. For full analysis, click here
Policymakers in Canada and Norway are expected to move rates by the same amount, while other advanced-economy counterparts may be more circumspect.
The BOE will probably keep rates unchanged after a cut in August that featured a rare three-way split among officials. The BOJ, meanwhile, remains on a path toward tightening but hasn’t signalled that such a step is imminent.
Central banks in other major economies are expected to maintain a watchful stance but not change rates. That’s the outcome forecast by economists for Indonesia, Brazil and South Africa. — Bloomberg
dyton mupawaenda