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September 10, 2018

Orbex, What to expect from ECB and BoE Monetary Policy Meetings this week?

The week ahead will remain to be another busy week with economic data coming out from all fronts.

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China will be releasing the inflation figures on Monday followed up later in the week with unemployment reports from the UK and Australia.

Among the central bank meeting line ups this week, the ECB and the Bank of England will be holding their respective monetary policy meetings on Thursday.

Data from the United States this week will cover the producer price index and the consumer price index data for the month of August alongside the retail sales report.

ECB most likely to maintain the status quo

The European Central Bank meets for the first time after the summer break.

The last monetary policy meeting that was held was in July.

The central bank did not make any changes to its monetary policy or the QE purchases.

It also left its forward guidance broadly unchanged focusing on the macro economic developments and the risks to monetary policy.

This week’s monetary policy meeting will see the release of the quarterly economic projections.

Growth in the Eurozone was seen to have returned.

However, in other areas, inflation continues to puzzle policy makers.

The latest flash inflation estimates for August showed that consumer prices eased slightly.

Headline inflation fell to 2.0% while core CPI was seen at 1.0%.

This was a slower pace of increase in consumer prices.

The data comes as the ECB will be ending its QE program at the end of this year.

Interest rates as previously announced by the central bank is expected to remain unchanged until the middle of next year at the very least.

Bank of England expected to leave interest rates steady

The Bank of England’s monetary policy meeting will be held on Thursday.

The meeting comes in the backdrop of the recent economic data that covered the monthly PMI reports for August measuring the activity in the services, construction and manufacturing sectors.

Ahead of the meeting, the economic data onslaught continues starting with the release of the monthly GDP figures from the Office for National Statistics.

This newly formed data covers the month to month GDP report which will feed into the quarterly GDP data which is closely monitored.

The UK’s economy was seen recovering modestly in the second quarter following a slow start to the first quarter of the year.

The Bank of England hiked interest rates by 25 basis points at the meeting August.

Therefore, no changes are expected at this week’s meeting.

The monthly employment data will also be coming out on Wednesday.

According to the latest report released last month, the UK’s unemployment rate was seen falling to fresh lows of 4.0%.

While this might have brought fresh cheer to the markets, the lack of wage growth remains a big concern amid inflation being well anchored above the BoE’s 2% inflation target rate.

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