The market sentiment is mixed, but there are still interesting movements on the market.
Bank of England lifts interest rates above crisis minimums
On Thursday, the Bank of England had its interest rates lifted above their financial crisis minimums. However, Britain’s major bank stressed it wasn’t going to keep increasing them in the nearer future because Brexit approaches with its uncertain terms.
The major bank’s nine rate-setters suddenly turned out to be unanimous in their vote to have rates lifted from 0.50% to 0.75%.
Financial analysts polled by Reuters had hoped for a 7-2 vote in favor of lifting rates.
Britain’s key bank told that the British economy, while soaring more slowly than it did previously ahead of the UK’s departure from the EU in 2019, was operating at nearly its speed limit, thus increasing the likelihood of greater home-grown inflation pressure ahead.
However, the message for interest rates still appeared to be one of gradual as well as limited leaps as Britain’s primary financial institution saw inflation just a fraction higher than its 2% objective for the next few years.
The estimate was built around on bets by traders who actually expect another rate lift next year or even in 2020. They guess the BoE will increase its rates to 1.1% in 2020. Evidently, it was a bit lower than an estimate of 1.2% the last time Britain’s major bank came up with estimates for the UK economy in May.
As for the reaction of the financial markets, it was quite muted. As a matter of fact, the British currency tacked on versus its US counterpart, while the UK government bond revenue added, but then slumped.
The world's number five economy has speeded down since the referendum outcome of 2016 to break up with the European Union.
At the same time the Bank of England kept drawing attention to the fact that the UK economy could be endangered by excessive inflation even with sluggish surge.
The Federal Open Market Committee (the department of the Federal Reserve) will publish the meeting minutes on October 7 at 21:00 MT time.
The Reserve Bank of Australia will post a rate statement, which contains an update on the interest rate on October 6, at 6:30 MT time.
Canada’s retail sales will be out on October 21 at 15:30 MT time. Get ready with us for this event!
The market is resilient ahead of the speeches of Fed’s Powell and ECB President Lagarde, but there are still interesting movements.
The uncertainty over US fiscal stimulus and Brexit, and also rising new virus cases deteriorated the market mood. That’s why we can expect the further rally of the US dollar and the fall of riskier assets today.