something interesting

<  BACK TO Market Analysis

BOE and ECB not expected to change their policy rates

The research team at Lloyds Bank remains of the view that neither the BOE nor the ECB will change their policy rates throughout the remainder of 2017.

Key Quotes

“With the subsidence of European political event risk, ECB policy is garnering greater attention from the market. There has been a notable shift in rhetoric from central bank speakers, including President Draghi. At its latest policy meeting in late April, interest rates were left unchanged, but, importantly, Draghi noted that the “downside risks to the economy have further diminished.” The underlying trends in European economic data are supportive of the broadening and durable recovery in the region. Most notably, the Euro Area Composite PMI is at a 6-year high and the German IFO survey shows business sentiment is the most buoyant it has been since German re-unification in the early 1990s.”

“There is growing speculation that the ECB will shift its forward guidance and possibly tighten monetary policy more quickly than the market is anticipating. We believe that they will remove reference to their downside interest rate bias in June, shifting towards a more neutral stance within their forward guidance. However, in our view, it is premature for policy makers to be considering a reduction in the pace of monthly asset purchases or increase policy rates. We expect the ECB to maintain its quantitative easing programme at €60bn/month for the remainder of the year and forecast the central bank to communicate a reduction in asset purchases for 2018 at its September meeting, potentially averaging €40bn/month in H1. We see the deposit rate on hold until H2 2018.”

“The BOE is also at an interesting juncture. At April’s meeting, Kristin Forbes dissented against the rest of the MPC in calling for an immediate hike in the Bank Rate. She maintained this position at May’s meeting. Her influence, however, is likely to wane in the coming weeks as her term expires at the end of June. However, it was carefully noted by the market that “relatively little” further upside news on activity or inflation would be required for “some” other members to be receptive to a tighter policy stance. In spite of this, we see the bar to imminent tightening as relatively high. While we have CPI inflation peaking at 3.3% (well above the central bank’s forecast of 2.8%), Governor Carney has already indicated that he is willing to look through this and described its underlying drivers as transitory.”

“More importantly, Q1 GDP growth disappointed at just 0.3%q/q and wage growth remains muted. Given this, and emerging signs of consumer weakness as sterling’s post-referendum drop reduces purchasing power, and in the backdrop of political uncertainty (UK general election and Brexit negotiations), the MPC will be wary of reversing the stimulus of August 2016 prematurely, only to risk being pushed into another round of loosening further down the line. As such, we believe the BOE is likely to leave policy unchanged for the foreseeable future.”

Source: fxstreet.com

The research team at Lloyds Bank remains of the view that neither the BOE nor the ECB will change their policy rates throughout the remainder of 2017.

Key Quotes

“With the subsidence of European political event risk, ECB policy is garnering greater attention from the market. There has been a notable shift in rhetoric from central bank speakers, including President Draghi. At its latest policy meeting in late April, interest rates were left unchanged, but, importantly, Draghi noted that the “downside risks to the economy have further diminished.” The underlying trends in European economic data are supportive of the broadening and durable recovery in the region. Most notably, the Euro Area Composite PMI is at a 6-year high and the German IFO survey shows business sentiment is the most buoyant it has been since German re-unification in the early 1990s.”

“There is growing speculation that the ECB will shift its forward guidance and possibly tighten monetary policy more quickly than the market is anticipating. We believe that they will remove reference to their downside interest rate bias in June, shifting towards a more neutral stance within their forward guidance. However, in our view, it is premature for policy makers to be considering a reduction in the pace of monthly asset purchases or increase policy rates. We expect the ECB to maintain its quantitative easing programme at €60bn/month for the remainder of the year and forecast the central bank to communicate a reduction in asset purchases for 2018 at its September meeting, potentially averaging €40bn/month in H1. We see the deposit rate on hold until H2 2018.”

“The BOE is also at an interesting juncture. At April’s meeting, Kristin Forbes dissented against the rest of the MPC in calling for an immediate hike in the Bank Rate. She maintained this position at May’s meeting. Her influence, however, is likely to wane in the coming weeks as her term expires at the end of June. However, it was carefully noted by the market that “relatively little” further upside news on activity or inflation would be required for “some” other members to be receptive to a tighter policy stance. In spite of this, we see the bar to imminent tightening as relatively high. While we have CPI inflation peaking at 3.3% (well above the central bank’s forecast of 2.8%), Governor Carney has already indicated that he is willing to look through this and described its underlying drivers as transitory.”

“More importantly, Q1 GDP growth disappointed at just 0.3%q/q and wage growth remains muted. Given this, and emerging signs of consumer weakness as sterling’s post-referendum drop reduces purchasing power, and in the backdrop of political uncertainty (UK general election and Brexit negotiations), the MPC will be wary of reversing the stimulus of August 2016 prematurely, only to risk being pushed into another round of loosening further down the line. As such, we believe the BOE is likely to leave policy unchanged for the foreseeable future.”

Source: fxstreet.com

lastest Articles

Market Analysis
USD/JPY consolidates near 1-1/2 month tops, comfortably above 108.00 handle
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
RBA Minutes: Little more downbeat
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD: Range trading – Commerzbank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
UK’s Raab: EU claiming no detailed plans put forward is a diplomatic pressure exercise
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
AUD/USD climbs back closer to multi-week tops, comfortable above mid-0.6800s
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Oil surges, how will EMs react? - TDS
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead- Central banks the only game in town
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
JPY Futures: further downside on the cards
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD further upside not ruled out – UOB
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Hopes for a small trade deal boosts mood, EUR/USD digests ECB whipsaw, US consumer in focus
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB press conference - September 12: Draghi speech live stream
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Breaking: ECB slashes rates by only 0.1% but announces QE, EUR/USD leaps, then crashes
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Company News
Buckle Up, Get Set ...and GO!
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold trades with modest gains around $1490 level, lacks follow-through
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Germany’s Merkel: We still have every chance of orderly Brexit
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Risk tone improves on trade progress, focus shifts to ECB
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Technical Analysis: A test of the 1.1080 region looks unlikely near term
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/JPY consolidates recent gains to over 1-month tops, holds above 132.00 handle
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/JPY Technical Analysis: Rising odds for extra gains near term
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Dollar Retreats After Jobs Miss and Higher Risk Appetite
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
US Dollar Index Technical Analysis: The near-term constructive view stays intact above 97.96
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/JPY Technical Analysis: Recovery stays firm. Next target at the 55-day SMA at 119.78
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold adds to Thursday’s steep decline, hits fresh 2-week lows
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR Futures: scope for extra gains near term
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB Pres. Nominee Lagarde: ECB need not be guided by markets
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/JPY climbs further beyond 129.00 handle, fresh weekly tops
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Company News
GBP Pairs Margin Requirement Change
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD: Poised to encounter the August low
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
AUD/USD should continue to find buyers on dips under 0.6700 – Westpac
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Technical Analysis: Further selling should see 1.0839 re-tested in the near term. Rebound not ruled out on ‘oversold’ condition
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD could drop further and test 1.0930 – UOB
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD: further downside not ruled out
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/JPY down move over?
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead – New Tariffs Begin on China as RBA, BOC, Riksbank and CBR have rate decisions
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
China Steals Fed’s Thunder With New Round of Tariffs
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD once again finds support near 1.2100 mark, turns neutral post-UK services PMI
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Technical Analysis: The outlook remains bearish while below the 55-day SMA near 1.1230
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: China strikes back with yuan devaluation, yen surges, commodity currencies crash
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week ahead – Focus shifts east
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Fed-fueled dollar dominates, GBP/USD fears BOE's Super Thursday, and more NFP hints eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD/JPY sits near 2-month tops, comfortably above 109.00 handle
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BoE and global PMIs amongst market movers today
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD/JPY: a test of 109.00 stays on the table
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Fed: Market currently fully pricing a 25bps cut – Deutsche Bank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: GBP/USD, AUD/USD, NZD/USD -31.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold holds steady near $1425 area, focus remains on FOMC/US-China trade talks
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BoJ: No fireworks offered
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: EUR/USD, GBP/USD, USD/JPY - 30.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/GBP climbs to 2-week highs around 0.9020
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BoJ to move towards strengthening its forward guidance
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: GBP/USD, AUD/USD, NZD/USD -29.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Week Ahead
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Technical Analysis: Looks neutral near term. A drop below 1.1100 cannot be ruled out
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
UK: Tough electoral rhetoric on Brexit - Rabobank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Fed: Scope for disappointment
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Technical Analysis: Holding on above 1.1100 ahead of the ECB event
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold steadily climbs to session tops, back closer to $1430 area
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB and German IFO amongst market movers today
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold steadily climbs to session tops, around $1425 level
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP: Strength to be faded as we get closer to general election - ING
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD drops to 2-month lows near 1.1120 on poor PMIs
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
US Dollar Index Technical Analysis: Extra gains could now test 97.60 ahead of 97.80
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 23.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Oil: Talk of 'Hidden' Iranian barrels, demand worries preventing jump higher - TDS
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD refreshes session lows, back below 1.2500 handle
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 22.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Forecast: Upside remains capped by the 21-day SMA around 1.1280
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Dollar mixed and Stocks Fall as markets brace for more global easing
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP: Guided by the UK politics
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD/JPY: Back under pressure
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 18.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold technical analysis: Bears challenge a key pivotal support near $1400 mark
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 17.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/JPY recovers from lows, back around 121.40
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Canada: Housing data in focus
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 15.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR: ECB-related uncertainty lingers
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD/CAD Canadian Dollar Higher as Dollar Faced Fed Cut Pressure
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD: Less of a safe haven now - ING
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 12.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BOE’s Vlieghe: BOE may need to raise rates if inflation expectations are deanchored by a no-deal Brexit
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold technical analysis: Set-up remains in favour of bullish traders, dip-buying to help the downside
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD - 11.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Bank Of England Sees Significant Market Volatility In Disorderly Brexit
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold steadily climbs to session tops, farther beyond $1400 handle
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 08.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: USD looking strong, Turkish lira plunges, new trade tensions arise
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
King Dollar’s reign could end on Powell’s testimony and trade war progress
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD at the crossroads - ING
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Oil: Prices likely to rebound this year – Danske Bank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
US: Payrolls likely to increase 150k in June - TDS
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
RBA: More rate cuts to come? - Westpac
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB’s Lane: No comments on monetary policy
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold slips back closer to overnight swing low, below $1415 level
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Technical Analysis: Further downside should test the 100-day SMA at 1.1259
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
RBA delivers consecutive cuts - TDS
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Tech Targets: EUR/USD, GBP/USD, NZD/USD, USD/JPY - 02.07.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD/CAD Canadian Dollar Rises on Rate Divergence With Fed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
G20 meeting: Trump and Xi meeting in focus - Westpac
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD/JPY: Market stays immediately offered
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613