The first week of August sees a busy economic calendar. Both the RBA and BoE are expected to raise rates by 50-bps this week. Jobs reports from New Zealand, Canada, and the US should give room to raise interest rates.
The New Zealand economy has had some fits and starts in 2022, but inflation rates remain near multi-decade highs and the labor market continues to be a bright spot. According to a Bloomberg News survey, New Zealand employment change increased by +0.4% q/q in 2Q’22 from +0.1% q/q in 1Q’22, while the unemployment rate eased to 3.1% from 3.2% - a fresh multi-decade low.
The Bank of England is likely to raise rates by 50-bps this week, bringing their main rate to 1.75%, according to a Bloomberg News survey. But much like the Federal Reserve last week, a rate hike may not be enough to keep thepointed higher. Instead, focus is on the BOE’s forward guidance: how many more rate hikes are coming down the pipeline.