The Bank of England decided to raise rates unanimously from 0.5% to 0.75% last Thursday. The pound was boosted as the unanimous vote was better than 7-0-2 vote the markets had original expected, however Governor Mark Carney’s speech which followed removed these original gains. In his speech, he mentioned how the UK needs a modest tightening of monetary policy and that gradual rate hikes are needed. He also mentioned how the UK is recovering from weakness in the first quarter and the UK exporters remain in a ‘sweet spot.’ Carney also continued to say the BOE has prepared themselves for any potential Brexit outcome, although he believes the chance of a no-deal Brexit is ‘uncomfortably high.’
Quite start to the week with no high tier data on the economic docket. The markets will continue to digest last week’s events.
The Reserve Bank of Australia will releasing their interest rate decision and are expected to keep rates on hold at 1.50%. They will also be releasing the rate statement. It is expected the statement could be on the dovish side due to the current presses on the housing market. In the US, the JOLTS job openings is expected to bounce up to 6.74m from 6.64m previously.
On Wednesday, the Reserve Bank of New Zealand will be releasing the latest interest rate decision and monetary policy statement. They are expected to keep rates on hold at 1.75%. The markets will be watching the policy statement closely for any hints as to when they could see the RBNZ raise rates in the future. The Reserve Bank of Australia’s Governor, Philip Lowe will be speaking at the Anika Foundation Luncheon in Sydney, to deliver a speech titled ‘Demographic Change and Recent Monetary Policy.’ Across the pond, Federal Reserve Bank of Richmond President and FOMC voting meeting, Thomas Barkin will be speaking at a local town hall event, where he is expected to answer questions from the audience.
Focus will be on the US on Thursday with the release of the latest PPI figure. Although the markets are expecting the US to raise rates in September, the Federal Reserve use the PPI figure as their gauge for inflation so a better than expected figure would provide the Fed with further support to go ahead with the planned September hike. The figure is expected to remain at 3.4%.
Friday will be the busiest day of the week with high tier data coming out of the UK, US and Canada. The UK will be first, with the release of the GDP figure and manufacturing production index. The prelim GDP quarter on quarter figure is expected to uptick to 0.4% from a revised 0.2%. The manufacturing production index is expected to downtick to 0.3% from 0.4%. Across the pond, the US CPI figure will be released. Although the Federal Reserve do not use this figure as their inflation guide, the figure still looks at the change in consumer prices. The reading is expected to remain static at 2.9%. In Canada, the employment change and unemployment rates figures will be released.