BoC Decision Next Week, What’s in Store for the Markets?

Tuesday,11 March 2025, 01:50 – Japan GDP (QoQ) (Q4)

Japan’s preliminary GDP data for Q4 2024 showed a 0.7% quarter-on-quarter expansion, exceeding market forecasts of 0.3% and equating to an annualized growth rate of 2.8%. This rise was largely fueled by net exports, as a notable 2.1% drop in imports outweighed a 1.1% increase in exports, according to Investing.com. However, domestic demand remained weak, with private consumption edging up just 0.1% and public demand staying flat, reflecting persistent challenges such as inflationary pressures and slow wage growth, as highlighted in Deloitte’s economic outlook. Looking ahead, growth in the next quarter is expected to be moderate amid ongoing concerns over domestic demand struggles and global economic uncertainties, including potential effects from U.S. tariff policies and China’s economic slowdown.

Wednesday, 12 March 2025, 14:30 – US Core CPI (MoM) (Feb)

In February, the latest Bureau of Labor Statistics report revealed the U.S. Core CPI, excluding food and energy, rose by 0.4 percent month-on-month in January 2025, up from a 0.2 percent increase in December 2024 and surpassing market forecasts of around 0.3 percent. The BLS highlighted a significant 0.4 percent jump in the shelter index, accounting for nearly 30 percent of the overall CPI increase, with additional pressures from medical care services, auto insurance, and recreation services, signaling persistent service-sector inflation. Analysts attribute this uptick to a robust labor market and sticky consumer demand, possibly intensified by seasonal adjustments and one-off price hikes, despite the Federal Reserve’s current rate range of 4.25%-4.50%, per economic commentary from J.P. Morgan and EY. For the upcoming February 2025 release, markets expect a slight easing to around 0.3 percent, driven by a potential correction of January’s seasonal distortions, though ongoing shelter and service cost pressures could keep the figure elevated.

Wednesday, 12 March 2025, 15:45 – BoC Interest Rate Decision

In February, the latest Bank of Canada (BoC) announcement revealed the policy interest rate was cut by 25 basis points to 3.00 percent in January 2025, down from 3.25 percent in December 2024, aligning with market forecasts of a quarter-point reduction. The BoC attributed this decision to inflation holding steady near the 2 percent target and past rate cuts boosting consumption and housing activity, though business investment remains weak amid uncertainties like U.S. tariff threats, per the Bank’s Monetary Policy Report.For the upcoming decision, markets is expecting another 25 basis point cut to 2.75 percent, driven by the need to cushion economic activity against potential trade disruptions, though heightened tariff risks could prompt a larger 50 basis point move if conditions worsen.

Thursday, 13 March 2025, 14:30 – US PPI (Feb)

In February, the latest Bureau of Labor Statistics report revealed the U.S. Producer Price Index (PPI) for final demand rose by 0.4 percent month-on-month in January 2025, up from a revised 0.5 percent increase in December 2024 and exceeding market forecasts of around 0.3 percent. The BLS attributed nearly two-thirds of this advance to a 0.6 percent surge in final demand goods, particularly a 3.5 percent jump in energy prices like diesel fuel, though services also edged up 0.3 percent, driven by higher costs in traveler accommodation and investment banking, per the BLS release. This uptick reflects renewed inflationary pressures, possibly linked to supply chain adjustments and tariff uncertainties, despite the Federal Reserve maintaining its 4.25%-4.50% rate range. For the upcoming release, markets expect a possible moderation to around 0.3 percent, supported by potential easing of energy price spikes, though persistent service-sector costs and trade policy risks could keep the figure firm.