Will the MPC Vote Change?
Good morning. It should be an interesting day on the markets today as we have a calendar full of varying data. We await reactions from news out of Japan, the US, New Zealand yesterday whilst also holding on for the ECB announcement tomorrow.
As the world’s business leaders, investors and journalists gather in Davos for the World Economic Forum, aside from moaning about how their coffees are now 20% more expensive than they would have been last week, most debate is expected to be about last week’s “black swan” event. The removal of the peg to the Euro by the SNB is still at the forefront of everyone’s minds, and this gives them the perfect opportunity to get a better understanding of why this course of action was taken and what its effects will be.
In the US, President Obama gave his sixth State of the Union address. In it, he outlined plans to help the middle class by increasing taxes on the most wealthy and signing trade deals to help further expand the economy. This was taken positively by Obama’s fellow Democrats who are looking beyond 2016, but is probably all going to be completely futile. The Republicans control both houses of Congress and so the likelihood of these motions getting passed are slim to none.
There will be much focus on the UK today as the Bank of England releases employment data and minutes from the last Monetary Policy Committee vote. Though unlikely to include too many surprises, particular attention will be paid to the voting pattern as although the trend has seen a 7-2 majority in favour of keeping rates on hold, there is a possibility that one of the two pro-hike voters may have reversed his decision.
As we await the introduction of QE tomorrow, there was a bit of positivity coming out of the Eurozone as GDP moved slightly higher, the German ZEW economic sentiment figure moved to its highest level in two years and the unemployment rate steadied.
In Japan, there was no change to its monetary policy, it upgraded growth forecasts and extended the deadline for loan programmes aimed at encouraging banks to boost lending.
Other than the glut of data out of the UK, we also have building permits and housing starts out of the US, and the Bank of Canada interest rate decision and statement.