No Movement From The BoE
Good morning. It appears that Greece and its negotiations with the Eurozone are still hogging the economic headlines.
We have the Bank of England rate decision today but this should pass without incident or major comment. There is not going to be any change to the 0.5% interest rate as this is off the agenda for the moment. Things are looking rosier in the UK garden at the moment as even though inflation remains low, PMIs have been positive with solid growth report courtesy of an increasingly strong domestic market. Despite European woes, we have also seen an increase in export order volumes for the first time in 5 months.
The ECB’s Peter Praet has commented on the current state of the Euro and how the current exchange rates better reflect the current economic divergence between the Eurozone and other countries, most notably the US. He also confirmed that the ECB would take further action if necessary and inflation will take time to react to QE measures.
The ruling Syriza Party are finding that life is easier as an opposition party as negotiations with the ECB are not going quite as well as they may have hoped for. In a further blow, the ECB has announced that it will no longer accept Greek bonds as collateral for its liquidity operations. By re imposing minimum credit ratings, it has effectively shifted the burden onto the Greek Central Bank to finance its lenders. In a few weeks, the Greeks will run out of money and it looks like the ECB are in no mood to compromise.
Other than the inevitable rate decision from the UK, there are further meetings between the Greeks and the ECB which could hog the headlines and jobless claims from the US.