The BoE Unlikely To Surprise At Today's Meeting

Market Brief

USD continued to hold on to its recent gains against most currencies although losing some ground against fellow safe haven trades. Strong Australian employment data failed to provide a significant boost to currencies outside the AUD, while regional equity markets traded tepidly on the positive side. Yesterdays US beige book report was basically what the market had expected, with the report reflecting a mixed view of the US economy. On one side, there were reports of a slow down with 'widespread signs of a deceleration', while other parts showed signs of moderate business activity.

Today's main focus will be the BoE rate decision where the MPC are expected to keep rates unchanged at 0.50% this month, and furthermore to hold the asset purchase target at GBP200bn. As such it is unlikely we will receive any accompanying statement (so expect a 2 week wait for the minutes to get finer detail). To recap, inflation has once again pared back to 3.1% in July (down from 3.2% in Jun, 3.4 % in May and 3.7% in Apr), but this is still an elevated print well in excess of the 2.0% target and indeed the 3.0% threshold set by the Treasury. Without seeing the minutes of this meeting however, this announcement from the MPC is likely to be a non-event.