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Canada Policy Interest Rate 4.5% (consensus 4.5%) in Jul-24

• The Bank of Canada reduced the policy interest rate by 25 basis points to 4.5%, consistent with the economic consensus, reflecting increased confidence in achieving the 2% inflation target.
• Canada's GDP growth increased to 1.5% in H1 2024, with CPI inflation moderating to 2.7% in June; core inflation measures indicate continued downward momentum, although shelter costs remain a significant inflationary pressure.
• The Bank remains vigilant about inflation risks, particularly from shelter and wage-driven services, and will base future interest rate decisions on incoming data and their implications for the inflation outlook, ensuring balanced economic growth and price stability.

ECB Refi Rate 4.25% (consensus 4.25%) in Jul-24

• The ECB kept key interest rates unchanged in July, following June's rate cuts, to manage persistent inflationary pressures while supporting economic recovery.
• Future interest rate decisions will be data-driven and flexible, avoiding pre-commitments to specific rate paths and based on ongoing assessments of inflation, economic data, and monetary policy transmission.
• Economic and financial risks, including geopolitical tensions and global trade dynamics, will influence the ECB's policy adjustments to ensure the stability and effectiveness of monetary policy transmission.

ECB: September Cut Not Yet Determined

• The ECB unanimously held its policy rates in July, as widely expected after June’s cut, and refused to pre-commit to any outcome in September.
• Its policy will depend on the data in the weeks and months ahead, with some policymakers likely to firm up their positions before September’s highlighted meeting.
• We still expect another cut in September, encouraged by the Fed and BoE also easing policy. However, their premature steps could swiftly require reversals in 2025.

By Philip Rush

Indonesia Policy Rate 6.25% (consensus 6.25%) in Jul-24

• Bank Indonesia kept its policy at 6.25%, aligning with market expectations to ensure inflation control and Rupiah stabilization amid ongoing global financial uncertainties.
• Future interest rate decisions will be influenced by persistent global financial market uncertainty, particularly the US monetary policy direction, and strong domestic economic growth driven by robust consumption and investment.
• Ensuring Rupiah stability and maintaining inflation within the 2.5 ± 1% target range remain central to Bank Indonesia’s strategy, supported by a mix of pro-market monetary operations, macroprudential policies, and digitalization efforts to foster economic resilience and growth.