• The Bank of Japan’s upcoming rate decision is highly uncertain, with core inflation at 2.6% in June and significant wage increases providing grounds for a potential immediate rate hike.
  • The US economy’s 2.8% growth in the second quarter complicates the Federal Reserve’s upcoming rate decision. While officials are expected to hold rates steady, a potential cut could come in September if inflation cools further.

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BOJ Rate Decision 

Over three-quarters of economists surveyed by Reuters expect the Bank of Japan to maintain its current rate next week, with a possible move in September or October.

However, sources indicate that the outcome of the July 30-31 meeting is uncertain. Core inflation reached 2.6% in June, surpassing the BOJ’s target, and May saw the largest increase in workers’ base pay in three decades. These factors provide grounds for an immediate rate hike. 

Euro Inflation 

The annual inflation rate in the Euro Area was confirmed at 2.5% in June 2024, down from 2.6% in May and 5.5% a year earlier. According to a quarterly survey of professional forecasters, the ECB is expected to meet its inflation target in 2025. The projection for 2024 remains unchanged at 2.4%, while the outlook for 2026 has dipped to 1.9% from 2%.

Amid these forecasts, 83% of respondents in an Invesco survey cited geopolitical tensions as their primary concern for the euro, rather than inflation. 

Fed Rate Decision 

Recent GDP data revealed that the US economy grew by 2.8% in the second quarter, surpassing expectations but complicating the Federal Reserve’s rate decision next week.

The Wall Street Journal reported that while the GDP figures shouldn’t alter the Federal Reserve’s outlook, officials have signaled their intent to hold interest rates steady next week, with a possible cut in September if inflation continues to cool. 

BOE Rate Decision 

After two months of silence from Bank of England Governor Andrew Bailey, the timing of a crucial interest rate change remains uncertain. By next week’s decision, Bailey will not have spoken publicly for over ten weeks, marking his longest communication gap in more than four years.

The Bank of England’s Monetary Policy Committee is set to announce its next interest rate decision on August 1. While an August cut was previously deemed likely, recent commentary suggests the decision is now finely balanced.