US-Iran Conflict Escalates as Central Banks Make Interest Rate Decisions
The US and Iran have escalated their conflict, with the US launching strikes against Iranian launchers near the Strait of Hormuz. This is the latest in a series of incidents between the two nations, which has been ongoing for several months. The Bank of Canada also made headlines this week, as it left interest rates unchanged at 2.25%. However, Governor Macklem noted that inflationary risks have increased, particularly due to rising oil prices.
The Reserve Bank of New Zealand (RBNZ) followed suit by raising interest rates by 25bps to 2.75% in its September meeting. The move was widely expected, given the country's high inflation rate. However, some analysts were disappointed that the RBNZ did not signal further hikes to come.
The US trade deficit also made headlines this week, with a July deficit of $88.6 billion. While this is a significant increase from June's figure, it is still below expectations. The labor market has been steady, with initial and continued claims remaining low.