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Fundamental Archives |
Written by Lloyds TSB |
Sep 09 10 04:09 GMT
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Daily Financial Market Outlook
The main economic event today is the Bank of England's interest rate announcement, at noon. We expect both the level of the bank rate and the size of the QE programme to be left unchanged at 0.5% and £200bn, respectively. However, the recent run of poor data, such as the PMI surveys and various housing market indicators, may reignite the debate about whether further policy easing is required to revive a faltering economic recovery. If, as we expect, growth shows sharply in the months ahead then options for further stimulus are likely to start dominating the MPC’s policy agenda. Although today's announcement is unlikely to prompt much market reaction, the minutes of the meeting, published in two weeks' time, could be more eventful, particularly if they show that support for further policy stimulus is growing.
Ahead of today's MPC announcement, UK external trade figures for July are released. We expect the visible trade deficit to have risen slightly to £7.6bn from £7.4bn the month before. Trade data are also released in the US and Canada. We look for a slight narrowing in the US trade deficit to US$47.5bn, but with the risk of a bigger decline should imports revert back towards their 3 month average level. Elsewhere the Central Bank of South Africa (SARB) is scheduled to give its interest rate announcement this afternoon. The market expects the official rate to be cut by 50bps to 6%, although given the strength of recent wage data, SARB might be persuaded to keep rates unchanged.
Chart: Did the rise in US imports continue into July?
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About the AuthorLloyds TSB Bank
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