Remarks from Janet Yellen took center stage last week, with a more dovish outlook hurting the likelihood of any interest rate adjustment until December. Plans to decrease the size of the Central Bank’s balance sheet were largely ignored, with the process to begin after the September meeting. One item that may hurt the Fed’s agenda is inflation, with the headline figure slipping to 1.60% and the core figure on hold at 1.70% printing below the Central Bank’s target. Shifting gears, the Bank of Canada raised rates for the first time since 2010, bringing the key interest rate to 0.75% from 0.50%.
Despite the positivity exuded by the Canadian dollar, global institutions continued to ring the warning bells on Canada’s outlook amid rising household indebtedness and housing risks. Across the Atlantic, unemployment in the United Kingdom fell to the lowest point since 1975, reaching 4.50%. However, wage growth once again failed to keep pace with inflation, eroding consumer purchasing power. To cap off the week, Chinese trade displayed notable gains, with both imports and exports rising through the twelve months ended in June, pushing the surplus higher. Policymakers were nonetheless confronted by weak consumer price inflation which remained on hold at a 1.50% annualized pace while the monthly rate slipped into contractionary territory.