Global Economic Outlook for the Week

Global Economic Outlook for the Week

The unemployment rate is expected to hold steady at 3.9%, with a high estimate of 4.0% and a low of 3.8%. Wage growth is projected to see a moderate increase from +0.2% to +0.3% between April and May, maintaining a year-over-year growth rate of +3.9%. In addition to these key figures, the upcoming week also includes the release of the US ISM manufacturing PMI, US JOLTs data, Aussie GDP growth figures, the US ADP non-farm employment report, and the US ISM services PMI.

The Bank of Canada (BoC) is scheduled to announce its rate decision on Wednesday at 1:45 pm GMT, with expectations of a 25bps rate cut due to cooling inflation and a weakening labor market. While some analysts predict a rate cut at this meeting, there are others who believe a cut may be more likely at the July meeting. Unlike the European Central Bank (ECB) officials who have expressed support for easing policy, the BoC members have not been as vocal on the matter. The recent economic data out of Canada, which showed slower than expected GDP growth and a high unemployment rate, may influence the BoC’s decision to cut rates.

On Thursday at 12:15 pm GMT, the European Central Bank (ECB) is expected to make a 25bp rate cut, as most economists and markets have priced in. The Governing Council Members have been advocating for a cut at this meeting, with Vice-President de Guindos even referring to it as a ‘fait accompli’. However, the direction of monetary policy following this rate cut remains uncertain. Some ECB officials have hinted at a pause in rate cuts in the coming months, depending on the economic data. ECB Chief Economist Philip Lane mentioned that, based on current data, a rate cut in July may not be necessary, indicating a cautious approach to further easing policies. The ECB President Christine Lagarde’s press conference and the release of the ECB’s new Staff Projections are expected to provide insight into future rate cuts and could potentially impact the markets.

The global economic outlook for the upcoming week is marked by uncertainties and potential policy changes from central banks. With key economic indicators showing mixed signals and central banks considering rate cuts to stimulate economic growth, investors and analysts will closely monitor the data releases and central bank meetings for any potential market-moving developments.


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