BoJ rate decision, Australian and Eurozone CPI inflation attract investors' attention

30 / 10 / 2018 | Market News
Wednesday October 31st 2018 is expected to be a day full of economic data releases coming from across the world. Economists will be able to scrutinise the data and form an opinion about the state of the relevant countries’ economies. The release of such data is becoming more important as the trade war between the United States and its partners such as China, the European Union (EU) and others is escalating putting a strain on the global economic growth. 

Australian CPI Inflation

The day will be starting from Australia where the Australian Bureau of Statistics (ABS) is expected to publish the Consumer Price Index (CPI) inflation data for the third quarter of 2018 (Q3 2018). According to the economists’ forecast, the CPI inflation is likely to have risen by 1.9% in the third quarter of 2018 on an annualised basis. The estimate is 0.2% less than the 2.1% inflation reading recorded in the second quarter of 2018. On a quarter-to-quarter basis the CPI inflation is expected to have remained unchanged at 0.4%. 

Analysts at TD Securities published a report on October 26th 2018 on Australia’s CPI inflation. In their report, they suggest that the country’s CPI inflation is likely to have risen by 0.6% on a quarterly basis and by 2.1% on a year-to-year basis. “We also arrive at +0.6%/q in a 'bottom up' sense. While fuel prices have recently exploded (late September/early October 2018), a dip earlier in the quarter sees Q3 fuel prices rise by +0.9%/q (although early tracking for Q4 is +7.6%/ q)” TD Securities’ analysts noted.

Bank of Japan (BoJ) interest rate decision 

On Wednesday October 31st the BoJ’s governing board will convene to decide on interest rates. The majority of economists polled by Reuters suggests that the BoJ will keep borrowing costs unchanged. Economists at Internationale Nederlanden Groep (ING) wrote in their report, released on October 29th 2018, that the BoJ’s October meeting will be an important one. “The BoJ’s Governor, Haruhiko Kuroda, has been dropping hints about changes to BoJ policy. He has been sounding more positive about inflation, with core (ex-fresh food) inflation now at 1.0%. The elusive 2% level may still be the official target, but there is a sense that a more pragmatic 'good enough’ rate of about 1% could pave the way for the BoJ to start tweaking its policy stance,” is noted in the report. ING’s economists said it is possible to see “more stealth tightening steps to come this week - and this could be mildly supportive for the Japanese Yen.”

Eurozone preliminary CPI inflation data

Going back to Europe, on Wednesday October 31st morning, Eurostat, which is the official statistical office of the European Union (EU), will publish the Eurozone’s preliminary CPI inflation data for October 2018. According to a poll published by Bloomberg on October 26th 2018, the CPI inflation is likely to have risen to 2.2% on an annualised basis, 0.1% higher than the September’s reading. The core CPI inflation is expected to have ticked up reaching 1.0% on a year-to-year basis. Eurostat will also release data regarding the Eurozone’s September 2018 unemployment rate which is likely to come in at 8.1%, remaining unchanged since August 2018. 

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