Interest Rates Day
Todays is the biggest day of the month for European and British markets as we await the interest rate decisions from the Bank of England and the European Central Bank. Analysts are divided as to whether the ECB monetary policy meeting will bring a rate cut today or next month as Mario Draghi is rather expected to prepare ground for further action. The BoE is widely expected keep rates on hold while Mark Carney tries to clarify the central bank’s forward guidance policy.
The ECB is generally expected to hold rates in February, leaving however the door open to further easing because of the deflation threat and the unemployment rate which remains stuck near record highs. The Bank of England is expected to introduce adjustments to its forward guidance policy, in the light of the fact that the unemployment rate has fallen unexpectedly rapidly towards the central bank’s 7% threshold. This steep fall has sent speculators to price in a rate hike sooner than later, which the BoE is not ready to deliver.
The BoE and the ECB will announce their monetary policy decisions at 12:00 and 12:45 GMT, respectively.