Focus Is On The NFP Report And Interest Rate Decisions

Contents

• Which way will the RBA go with interest rates
•  What's next for nonfarm payrolls? Another shocker
• Reversal of Rate Hikes Expected from BoC
• The Bank of Japan Will Choose Future Interest Rates
• The GDP of the Eurozone grows in the fourth quarter of 2022
• In January, retail sales in the Eurozone
• Expectations are high that Japan's economy saw expansion in Q4 2022
• Inflation as measured by China's consumer price index in February
• Increasing GDP in the United Kingdom
  

 The US Nonfarm Payrolls report and the interest rate announcements from the Reserve Bank of Australia (RBA) and the Bank of Japan (BoJ) stand out among the week's many significant economic data releases.

Which way will the RBA go with interest rates?

The RBA will reveal its interest rate decision on March 7th, a Tuesday. For the tenth time in a row, economists predict that Australia's central bank will raise its benchmark interest rate. Experts from ANZ, Commonwealth, and Westpac all agree that a 0.25 percent increase is likely. Rates of borrowing were increased by the RBA in February, to 3.35 percent.

According to Reuters, "Australia's central bank, shocked by the potential that inflation may prove stickier than previously believed, abandoned any concept of halting at its February policy meeting and warned additional rate rises would be required in the months ahead."

What's next for nonfarm payrolls? Another shocker?

On Friday, the US Bureau of Labour Statistics (BLS) is scheduled to publish the statistics for February's Nonfarm Payrolls. Some experts anticipate that 200,000 jobs were added to the US economy during the month of February. Nonfarm Payrolls have a tendency to surprise markets and cause volatility.

According to the BLS January NFP report, 517,000 new jobs were created during the first month of the year, causing a rally in the US dollar despite the fact that market analysts had expected a rise of only 185,000. A Morgan Stanley report suggests that if the February NFPs reach the 500k figure once again, the Federal Reserve may have to consider a 50 basis points rate hike at the next monetary policy meeting.

Reversal of Rate Hikes Expected from BoC?

The governing board of the Bank of Canada (BoC) will meet on March 8 to make a decision on interest rates. BoC policymakers have indicated that they are prepared to pause rate hikes as the tight monetary policy takes effect in the Canadian economy. This comes after Statistics Canada reported last week that the Canadian economy grew by zero percent in the fourth quarter of 2022 compared to the previous quarter, ending a streak of five consecutive quarters of GDP growth.

The Bank of Canada's benchmark rate is 4.5 percent as of this writing, and CIBC analysts predict that it will remain at that level throughout the year before being progressively lowered in 2024.

The Bank of Japan Will Choose Future Interest Rates

Bank of Japan (BOJ) board member Junko Nakagawa told reporters that the central bank must maintain its ultra-loose monetary policy for the time being as the economy hasn't achieved its 2% inflation target. The BOJ's governing board is expected to announce its interest rate decision on March 10th. Economists suggest that borrowing costs will remain unchanged.

According to a Reuters poll, however, Japanese businesses are split on whether the Bank of Japan's new administration should make changes to its negative interest rate policy.

The GDP of the Eurozone grows in the fourth quarter of 2022?

The GDP growth rate for the Eurozone for the fourth quarter of 2022 will be released by Eurostat on Wednesday. The market expects quarterly growth of 0.1% and annual growth of 1.9%. Economists continue to speculate that the mild weather may have contributed to the expansion of the Eurozone's economy.

The European Commission (EC) has increased its projection for economic growth in the Eurozone for 2023 to 0.9%, up from the prior projection of 0.3%, while leaving its projection for growth in 2024 intact at 1.5%.

In January, retail sales in the Eurozone

On Monday, investors will be able to study Eurostat's data on retail sales in the currency bloc, where monthly sales are expected to have dropped 0.3% in January (from December) and yearly sales are expected to have dropped 1.2% (from December 2018).

As a result of rising inflation, consumer demand dropped in December 2022, as seen by a drop in retail sales, which was reported by Eurostat to have been 8.5% year over year in February (down from 8.6% in January).

Expectations are high that Japan's economy saw expansion in Q4 2022

Analysts predict that Japan's GDP expanded by 0.2% on a quarterly basis in the fourth quarter of 2022, which would be the first quarterly growth since the April-June quarter of 2022. The Japanese Cabinet Office will issue the data on GDP on March 8th.

According to Moody's Analytics, "our baseline view is still for Japan to eke out moderate growth in 2023 as domestic demand improves, supported by the removal of COVID-19 restrictions, falling inflation, and the resumption of international travel." However, the GDP is still far from its pre-pandemic peak levels of output, and there are significant risks to the outlook. Weak momentum abroad will weigh on exports.

Inflation as measured by China's consumer price index in February

Investors will get the chance to review the Chinese Consumer Price Index (CPI) inflation report for the month of February on March 9th, when it is issued by the National Bureau of Statistics (NBS). The report is anticipated to indicate that inflation stayed stable at 2.1% on an annualised basis, while experts believe that inflation slowed down to 0.3% on a month-to-month basis.

Midway through February, analysts at Moody's Analytics said, "China's reopening won't be a silver bullet. While 2023 is looking a lot more optimistic than what we originally projected, the year is sure to be bumpy; it will take time for families to really shake the Covid-19 blues."

Increasing GDP in the United Kingdom?

The ONS is likely to release figures showing the UK economy grew by 0.1% month-over-month in January, in line with estimates made by economists.

According to BoE Chief Economist Huw Pill's press conference remarks, the British economy is gaining somewhat more traction than expected, and wage growth is also proving to be quicker than expected.

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