Carney wrongly downplays effects of a Brexit?
With another quiet day on the data front, the markets continue to speculate whether Draghi and the European Central Bank (ECB) will extend the current Quantitative Easing programme at tomorrow’s monetary policy statement. As a result EUR/USD has remained jumpy. It would appear that the likely outcome is more of the same from the ECB, as the ECB member Noyer, was emphatic when he said that the ECB’s Quantitative Easing represented the “right amount” of stimulus. However, any surprise decision from the meeting could send the Euro reeling.
Bank of England Governor Mark Carney is speaking again today at St Peter’s College discussing the impact that a possible Brexit from the EU will have on the Bank of England. Yesterday Carney labelled the report a “yawner” and seemingly is playing down the impact of a Brexit. Such tone could lend Sterling some short term strength.
However any uncertainty ahead of a referendum is likely to affect both business and consumer confidence, which may then hinder economic growth. Such a scenario could possibly affect rate hike decisions going forward. Mr Carney is also to seeking the Treasury Select Committee’s approval for the Monetary Policy to meet only eight times per year, instead of 12 times a year. This would reduce the frequency that the markets will be disappointed by a lack of a rate hike.
Elsewhere, Canada release their interest rate decision and monetary report. The Canadian Dollar has experienced some volatility of late party due to falling commodity prices. It is expected that the Bank of Canada will keep interest rates at a record low of 0.50%, though an upbeat shift in policy outlook could possibly increase the strength of the Canadian Dollar.