SEPTEMBER 11, 2023 – THE EU AND CANADA HOLD RATES STEADY THIS MONTH
The European Central Bank is expected to hold interest rates steady at their meeting this Thursday, and economists are split as to whether there will be one more hike before the end of the year. Economic activity in the 20-nation union has slowed under the rate rise from effectively zero in July 2022 to 3.75 percent now, yet EU inflation remains well above the 2 percent target, coming in at 5.3 percent in August. The Bank of Canada did not lift rates last week, keeping rates at 5 percent, a 22-year high. Canada’s economy contracted in Q2, but inflation remains high at 3.3 percent, which means another rate hike in 2023 is a possibility.
It is likely the US will follow the same pattern. The Fed will be meeting next week on September 19-20, with a low probability they will raise rates given the slight slowing of the economic data recently. The meeting should provide hints whether to expect an increase in rates at the next meeting on November 1.