Good morning, and welcome to our renewed coverage of the global economy, financial markets, the eurozone, and business.
The Bank of England She has a lot on her health now. The economy is emerging from one of the worst recessions it has ever seen, and a no-deal Brexit may loom, and inflation has fallen to near zero.
Today afternoon, the Bank of England will unveil its latest monetary policy decision, and share its assessment of the economic outlook. That is likely to be a realistic reading, as unemployment is expected to nearly double this year.
The bank could drop some loud hints that it will launch more stimulus measures soon, especially if Brexit fears grip the economy more tightly.
Jim Reed Deutsche Bank expects the Bank of England to leave interest rates and its quantitative easing program on hold today, but may act before Christmas:
Our case is that there will be an additional £ 60bn increase for the quantitative easing program in December, despite the increased risks that may be announced a little early at the November meeting. The meeting comes against the backdrop of mounting uncertainty over Brexit, which will only increase uncertainty and weaken confidence.
Brexit was not mentioned once in the August meeting minutes, but it will be interesting to see if this change …
The US central bank has already had its say. Last night, the Uederal Reserve Board said it would keep interest rates at record low levels until at least 2023, to ensure inflation is on track to exceed its target..
As Fed Chairman Jerome Powell said:
What we are effectively saying is that prices will remain very affordable until the economy passes away in its recovery.
The Federal Reserve also raised its forecast for growth and unemployment, indicating confidence in the economy’s recovery. It only now expects US GDP to contract 3.7% this year, up from a 6.5% contraction before. Unemployment is now expected to reach 7.6% by the end of the year, down from 9.3%.
You might expect this pledge to a more loose monetary policy to encourage investors and raise risky assets, but US stocks actually closed lower overnight, with the Nasdaq losing 1.25%.
Investors were concerned that Powell had warned that the US recovery could be in jeopardy without more government spending – a warning to Congress to end their wrangling over stimulus packages.
Fiona Cincotta From City Index He explains:
Stocks were sold and the US dollar rallied after the Federal Reserve announced its move and avoided risk as the market portrayed its frustration with the Fed’s reluctance to provide further stimulus.
This sent stocks collapsing in Asia, and European stocks also face losses at the open. The FTSE 100 is expected to decline about 1% – again to the 6,000 point mark.
We will be tracking all measures throughout the day, including the latest US unemployment and housing data.
schedule of work
- Noon BST: Bank of England interest rate decision
- 1.30pm GMT: Weekly US unemployment numbers
- 1.30pm GMT: US mortgage approvals and housing starts
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