Ankara: Major central banks worldwide are poised to announce their monetary policy decisions as geopolitical risks in the Middle East and uncertainties surrounding global inflation and economic growth loom large. As the final quarter of the year approaches, the financial world is watching closely to see how these key players will navigate the current economic landscape.
According to Anadolu Agency, the ongoing geopolitical tensions involving the US, Israel, and Iran are having a significant impact on global economies. The regional conflicts are exacerbating energy supply concerns, which in turn are putting pressure on economies already grappling with inflation. These developments have placed the upcoming September meetings of the Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Japan (BoJ) in the spotlight.
The forward guidance from these central banks for the upcoming period will be pivotal in shaping market trends. Initially, forecasts for rate cuts were anticipated amidst accelerating disinflation in most global economies. However, with the energy shocks that began on February 28 due to the Middle East conflict, hawkish projections have taken precedence.
The Fed's meeting in September is expected to be a significant event influencing global market directions. Slowing inflation and signs of weakness in the US labor market have tempered expectations for a hawkish stance from the Fed. The bank is predicted to maintain its policy rate next month, with markets pricing in a 63% probability, despite strong expectations for a possible rate hike by the end of the year.
Similarly, the Bank of Canada (BoC) is anticipated to maintain rates next month, having already kept its policy rate at 2.25% in June for the sixth consecutive meeting. Meanwhile, the ECB is widely expected to increase rates by 25 basis points on September 10, as the eurozone's annual inflation rose to 2.9% in July due to rising energy prices, according to preliminary data from Eurostat.
European central banks face a busy schedule next month, with the Bank of England (BoE), the Swiss National Bank (SNB), and the Central Bank of Russia (CBR) all set to announce their monetary policy decisions. The BoE is expected to maintain its policy rate as inflation figures align with estimates, despite the Middle East conflict contributing to higher inflation in the UK.
In Turkey, the Central Bank of Turkey (CBRT) will reveal its monetary policy decision on September 10. Despite a slight decline in core inflation, the CBRT maintained its one-week repo auction rate at 37% in July. The bank noted that energy prices were on the rise again due to geopolitical uncertainties and that domestic demand had eased.
In Asia, the BoJ will make its critical monetary policy decision on September 18. After the Japanese yen recently fell to its lowest level against the dollar in 40 years, the BoJ is expected to raise its policy rate by 25 basis points next month.
In Oceania, the Reserve Bank of Australia (RBA) is expected to maintain rates in the coming month, as it continues to play a significant role in regional financial liquidity.