Bank of England meeting
An in-depth look at the Bank of England’s MPC
announcement – including its role in shaping the UK
economy, and how this affects traders.
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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
This week’s meetings of the BoE and ECB will be those of banks content to sit and await developments for the time being.
No change is expected this time around from the Bank of England (BoE), having undertaken to hike rates last month. The mantra from the BoE remains ‘limited’ and ‘gradual’ when it comes to rate rises, following the path set by the Federal Reserve (Fed).
Recent purchasing managers index (PMI) figures from the UK have been better for the construction and services sectors, but manufacturing remains under pressure. Wage data and gross domestic product (GDP) figures, however, have picked up, so it is not all doom and gloom where the UK economy is concerned.
But all this is a sideshow compared to Brexit. Until this uncertainty is removed the outlook remains clouded, and interest rates are likely to stay low, if not unchanged, as a result. With the outlook for monetary policy muted sterling’s main driver will be the Brexit headlines.
An in-depth look at the Bank of England’s MPC
announcement – including its role in shaping the UK
economy, and how this affects traders.
Here too, ‘no change’ is still the order of the day. The bank continues to expect an orderly exit from its quantitative easing (QE) programme, with the ructions caused by the Italian government yet to have an impact. It looks very unlikely that the European Central Bank (ECB) will make any adjustments to its programme in order to appease Rome.
GDP and inflation projections will remain unchanged, although one point to watch will be core inflation projections, which ING thinks are currently subject to ‘extreme optimism’ regarding a move to 1.9% from the current 1%.
Barring a major change, the bank will hold fast at this meeting, sticking with the plan to end QE by the end of the year. The bank will stress it remains alive to threats to the outlook, but a steady approach remains the likely outcome of this meeting, and indeed others later in 2018.
Learn about the European Central Bank (ECB) Governing Council announcement – including how it affects the European economy and financial markets.
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