Central Bank Watch: BOE & ECB Interest Rate Expectations Update
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Central Bank Watch Overview:
The BOE and the ECB are meeting later this month, but focus is on what they’ll do later this year and beyond.
The BOE is further along the path of normalization, while the ECB is still toying with ideas about how it may further enhance its stimulus measures in context of rising inflation pressures.
Inflation Making Central Bankers Uneasy
In this edition of Central Bank Watch, we’ll cover the two major central banks in Europe: the Bank of England and the European Central Bank. Neither of Europe’s most significant central banks won’t meet again until later this month, allowing for the EUR- and GBP-crosses to toy with speculation over forthcoming policy moves. And while one of the central banks has begun to throttle back its QE program, the other is grappling with its desire to provide additional stimulus against the backdrop of rising inflationary pressures.
(Bloomberg) Federal Reserve Chair Jerome Powell is likely to emphasize a dovish message to Congress in his first testimony since Democrats took control of…
2/12/2021 5:11:05 AM GMT | By Anil Panchal
Friday’s preliminary reading of the fourth-quarter (Q4) UK GDP numbers, up for publishing at 07:00 GMT, gains more importance after the Bank of England’s (BOE) hawkish stint. Market consensus suggests the Office for National Statistics (ONS) print downbeat QoQ figures of 0.5% versus 16% whereas the YoY data may have improved from -8.6% to -8.1%, per the forecasts.
In addition to the quarterly GDP, December’s monthly growth figures will accompany Trade Balance and Industrial Production details for the stated period to keep the GBP/USD traders busy during the early Friday.
Forecasts suggest that the UK GDP will rise to 1.0% MoM in December versus -2.6% prior while the Index of Services (3M/3M) for the same period is seen recovered from +3.7% prior.
US
The US is still seeing disturbing news on the Covid front and the economy is starting to show further signs of weakness from the third coronavirus wave. Too many parts of the country are low on ICU beds and concerns are that the slow vaccine rollout will mean lockdown efforts may intensify in the coming weeks.
The Markit flash PMI readings are expected to show softness in both the manufacturing and service sectors. Initial jobless claims are clearly trending higher and could top a million this week. The housing market will remain the bright spot of the economy but both housing starts and existing home sales will show some seasonality weakness.