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  • richard evans

ECB rate meeting this week, Fed and BoE next week

Good morning

Welcome to a rather blustery Monday morning. I say blustery, we did have some heavy rain and strong winds overnight, but I suspect some of you will have got it rather worse than we did. I understand there is more to come, so I hope everything is still standing and remains that way.

A quick look at the currency markets this morning sees GBPUSD 1.2700, EURUSD 1.0890 and GBPEUR 1.1655. Equity markets are mixed, US markets hit record highs last Friday, a combination of hopefully lowering inflation, decent economic activity and the ‘promise’ of lower rates all helping sentiment, while overnight China’s equity markets slumped after PBoC left one and five year loan prime rates unchanged and reports of some local governments being ordered to stop infrastructure projects. Hong Kongs Hang Seng index is perilously close to the lows from Oct 2022, we’d need to go back to 2009 to see lower levels than that.

In Germany there have been protests against the far-right AfD party who it is claimed have investigated mass-deportation plans. There are questions as to whether the party should be banned, but it still holds significant support as people turn to more populist ideas. AfD have also said they would look for a UK-style referendum on EU membership were it to come to power. Unlikely as it may be, it is not impossible.

There is some talk that BoE will offer a more dovish tone at its next meeting on 1st Feb. Bloomberg reports that some senior economists think their ongoing suggestions of rate rises are not in keeping with the current economic climate, nor with the guidance of other central banks such as Fed and ECB. UK data out early tomorrow morning may show how much room Chancellor Hunt has for tax cuts in the next UK budget in March.

I see measles is making something of a return, a rise in cases being reported with London and West Midlands seeing cases at the highest levels since 1996, far removed from 2016 when the UK was declared ‘measles-free’. A campaign to boost take-up of the measles vaccine has been launched. I wonder whether people avoided measles vaccinations over the Covid lockdown, or whether the talk of risks of Covid vaccinations have damaged the take-up of other vaccines. Or, I guess it is possible that people of non-UK origin who are settled here are not aware or not happy with the idea of vaccinations.

I remember when we had to make the choice of giving the kids the MMR vaccine, back then there had been reports that it could potentially lead to autism, these claims were fully debunked but we still had our concerns. We got over it, lets hope others do too.

It’s a pretty full calendar through the rest of the week with ECB, BoJ and BoC rate announcements, plus UK, US and EU PMI’s, among others. Fed and BoE rate meetings come next week. For now, lets sit out this latest storm and hope we find our garden furniture where we left it.

- 12.00 Buba monthly report

- 22.30 NZ business PMI

- 04.00 BoJ rate announcement

- 07.00 UK PSNB

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