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May 2016

Bank of England meeting and quarterly inflation report today

Published: Thursday 12 May 2016

  • Bank of England meeting and quarterly inflation report today
  • Growth outlook expected to be downgraded
  • Carney likely to talk about Brexit concerns
     
The Norwegian Krona will come into focus today as the Norges bank meets to discuss policy. The current surge in oil prices will be at the forefront of their minds as will the recent consolidation of stock markets. Having already reduced rates to an all-time low of 0.5% in March, it is unlikely that the central bank will move again quite so soon however a signal of intent to act if necessary could see the Krona weaken further.
 
The highlight of the day will of course be the Bank of England meeting and inflation report later this afternoon. No change of policy is expected but the tone of the discussion, the inflation report and indeed Governor Carney's press conference is likely to be downbeat. There is already a lot of talk that they will downgrade growth and inflation forecasts which have been weighing on the Pound. Mr Carney may also once more highlight the economic risks of a Brexit although there is no chance of any policy change ahead of the referendum. The near term fate of Sterling is dependent on how dovish the message is later today. With markets already expecting a dire assessment there is a risk that we see a rally in the Pound if that expectation is not met.
 
The rest of the data calendar is fairly light with only import prices and jobless claims due from the United States today. There are a number of Federal Reserve officials due to speak this afternoon , all of whom are likely to discuss the scope for further rate hikes later this year. The Dollar is sensitive to market sentiment as the Fed is still insisting that there will be 2 more increases in 2016 while the market is not pricing in a move until early 2017.
 

Today's Major Economic Releases

 
Market BST Data/Event Previous Expected
GBP 12:00 UK: BoE inflation report    
GBP 12:00 UK: MPC official bank rate votes 0-0-9 0-0-9
GBP 12:00 UK: Monetary policy summary    
GBP 12:00 UK: Official bank rate  0.50 0.50
CAD 13:30 Canada: NHPI m/m 0.2 0.3
USD 13:30 US: Unemployment claims 274 277
NZD 23:45 New Zealand: Retail sales q/q 1.2 1.0

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