Bank of England to hold fire after August's Brexit bazooka
The Bank of England holds a monetary policy meeting on Thursday as more hard economic numbers trickle in following June's Brexit shock, while U.S. data and a speech by policymaker Lael Brainard will give Fed-watchers food for thought. Data and surveys in the coming week will also give a steer on price and industry trends in the euro zone after the European Central Bank disappointed market expectations that it would announce an extension of its asset purchase program.
Speaking to lawmakers on Sept. 7, Governor Mark Carney defended the BoE's big August stimulus package but said initial damage to the economy from Britain's June 23 vote to leave the European Union looked less severe than the Bank had forecast.
While some critics of the BoE have suggested August's decision to cut interest rates to a record low 0.25 percent, restart asset purchases and ease lending by giving cheap loans to banks was too aggressive, the Bank is expected to cut rates again later this year but leave policy unchanged this month. "We see next Thursday as being too soon for further action and expect the BoE to maintain Bank Rate at 0.25 percent and the level of QE (asset purchases) at 435 billion pounds ($578.5 billion)," Investec economists said. "Our central case continues to be for another 15 basis point cut in Bank Rate to 0.10 percent at the November meeting."
Official figures, including inflation on Tuesday, unemployment on Wednesday and retail sales on Thursday, should give a clearer picture of how companies and consumers are responding to the Brexit vote after purchasing manager surveys showed activity bouncing back last month. Economists polled by Reuters forecast consumer prices will be 0.7 percent higher in August compared with a year ago, edging up from 0.6 percent in July, which was the biggest annual rise since the end of 2014. But sterling's tumble since the Brexit vote means inflation is expected to rise strongly soon.
The unemployment rate for the three months to July is forecast to stay at 4.9 percent - an almost 11-year low - while the number of people claiming jobless benefits in August is seen rising after a surprise fall in July. Monthly retail sales are predicted to have fallen in August after a jump in July, when consumers showed no immediate alarm at the Brexit vote.
European Union leaders will meanwhile gather on Friday - without British Prime Minister Theresa May - to discuss Brexit and other issues. Thursday's eurozone CPI release is expected to show annual inflation was 0.2 percent in August, in line with the new 2016 forecast the ECB gave on Sept. 8.
The sharpest drop in German industrial output for nearly two years may presage a fall in the July figure for the euro zone, due on Wednesday, although recent purchasing manager surveys have pointed to continued modest growth in manufacturing in the third quarter. Eurozone trade and employment data will also be released in the coming week, as well the ZEW survey of economic sentiment in Germany, the currency bloc's economic engine. Swiss National Bank policymakers also meet on Thursday, with no change to policy expected.
Speaking to lawmakers on Sept. 7, Governor Mark Carney defended the BoE's big August stimulus package but said initial damage to the economy from Britain's June 23 vote to leave the European Union looked less severe than the Bank had forecast.
While some critics of the BoE have suggested August's decision to cut interest rates to a record low 0.25 percent, restart asset purchases and ease lending by giving cheap loans to banks was too aggressive, the Bank is expected to cut rates again later this year but leave policy unchanged this month. "We see next Thursday as being too soon for further action and expect the BoE to maintain Bank Rate at 0.25 percent and the level of QE (asset purchases) at 435 billion pounds ($578.5 billion)," Investec economists said. "Our central case continues to be for another 15 basis point cut in Bank Rate to 0.10 percent at the November meeting."
Official figures, including inflation on Tuesday, unemployment on Wednesday and retail sales on Thursday, should give a clearer picture of how companies and consumers are responding to the Brexit vote after purchasing manager surveys showed activity bouncing back last month. Economists polled by Reuters forecast consumer prices will be 0.7 percent higher in August compared with a year ago, edging up from 0.6 percent in July, which was the biggest annual rise since the end of 2014. But sterling's tumble since the Brexit vote means inflation is expected to rise strongly soon.
The unemployment rate for the three months to July is forecast to stay at 4.9 percent - an almost 11-year low - while the number of people claiming jobless benefits in August is seen rising after a surprise fall in July. Monthly retail sales are predicted to have fallen in August after a jump in July, when consumers showed no immediate alarm at the Brexit vote.
European Union leaders will meanwhile gather on Friday - without British Prime Minister Theresa May - to discuss Brexit and other issues. Thursday's eurozone CPI release is expected to show annual inflation was 0.2 percent in August, in line with the new 2016 forecast the ECB gave on Sept. 8.
The sharpest drop in German industrial output for nearly two years may presage a fall in the July figure for the euro zone, due on Wednesday, although recent purchasing manager surveys have pointed to continued modest growth in manufacturing in the third quarter. Eurozone trade and employment data will also be released in the coming week, as well the ZEW survey of economic sentiment in Germany, the currency bloc's economic engine. Swiss National Bank policymakers also meet on Thursday, with no change to policy expected.
Last Update: September 11, 2016 22:49