IAIC Market Update - January 30, 2023
Last Week in the Markets: January 23rd – 27th, 2023
(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)
What happened last week?
- The Bank of Canada released its latest monetary policy on Wednesday morning, raising the policy interest rate by 25 basis points to 4.50%. Since March 2022 Canada’s central bank has increased this rate from its effective lower boundary of 0.25% by 4.25%.
- Some of the criteria underlying the interest rate decision includes Canadian and American consumer and producer inflation, the jobs market (job creation, total employment, labour force participation and unemployment), and economic conditions, globally. The Bank expects domestic inflation to fall back to about 3% this year and near 2% in 2024 as energy prices continue to fall and restrictive monetary policy continues to reduce demand, which will eventually slow the demand for workers. The easing of restrictions in China promotes additional economic growth there, and the Bank of Canada projects that the global economy will grow by 2% this year and 2½% in 2023.
- The next scheduled monetary policy release by the U.S. Federal Reserve is February 1, and indications from their leadership of additional rate increases must be included in our central bank’s reasoning.
Bank of Canada release, press conference and Monetary Policy Report
What’s ahead for this week?
- In Canada, November’s Gross Domestic Product (GDP) data will be announced. An improvement from its 0.1% decline in October is expected, but the interest rate increases imposed by the Bank of Canada since March are anticipated as a significant deterrent to economic growth.
- In the U.S., the Federal Reserve’s Federal Open Market Committee (FOMC) will release a monetary policy update on Wednesday afternoon. The size of an interest rate increase has been one of the most popular points of debate for business and economic news. January’s non-farm payroll report portray the health of the jobs market, which is the companion to inflation as the Federal Reserve’s twin mandates.
- Globally, German GDP, trade balance, import price index, producer price index (PPI), retail sales, and consumer price index (CPI), French PPI, and Italian CPI will be reported. The CPI and PPI for the entire Eurozone will be reported in aggregate as the European Central Bank ponders additional rate increases.
For more information contact:
Independent Accountants’ Investment Counsel Inc.
135 Main St. E. Listowel, ON
Phone: 519-291-2817 or TF: 1-877-291-3040
icpmss@iaic.ca
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