December 8, 2023

Queen’s passing postpones BoE rate decision by a week

LQDFXperts Features | BoE rate decision postponed by a week in light of the Queen’s passing

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As the world mourns the Queen’s passing, the longest-serving British monarch, a series of royal protocols will unfold. 

The day of the Queen’s funeral, to take place next Monday, will be a bank holiday in the UK. As a result, the financial world will see some scheduling changes but will mostly roll on.

For example, the Bank of England has postponed the committee’s rate decision until September 22nd. However, the Office of National Statistics will still release key GDP, inflation, unemployment and retail sales data. 

This week is all about inflation in the US, and Wall Street is looking for further signs that pricing pressures are easing. This is the last major inflation reading before the Federal Reserve’s Sept. 20-21 meeting that has most economists expecting another 75 basis-point rate increase.

On the war front, this weekend served as a reminder of the ongoing and changing nature of the Russia-Ukraine war. Ukraine’s surprising recapture of the city of Ilium has caught observers’ attention worldwide as a potential military landscape shift.

Russia has continued to escalate economic pressure on Europe by shutting down the Nord Stream 1 gas pipeline. Soaring energy prices threaten to spark social unrest and inflict a recession. As a result, Europe’s leaders are racing to pull together radical plans to counter Putin’s gas cut-off.

While the recent developments may not have a direct market impact, the repercussions could echo through the financial world. 

A new set of inflation reports comes out

The week ahead will produce several critical interest rate decisions from the Bank of Canada, European Central Bank, and Reserve Bank of Australia.

A bunch of August Consumer Price Index (CPI) reports come out this week. Germany, Spain, and the U.S. all release their CPI on Tuesday. The UK releases its report on Wednesday, France releases its report on Thursday, and Italy and the Eurozone release theirs on Friday.

US Consumer prices climbed at an 8.3% annual pace in August, 0.1% higher than July. Economists had expected prices to dip 0.1% in August over the month and slow to an 8% annual pace. Markets shuddered on higher-than-expected inflation numbers.

Producer Price Index (PPI) reports are also due out from Japan, Switzerland (Tuesday), the UK  and the US (Wednesday).

The U.K. may probably see core CPI month-over-month growth of 0.8%, a significant jump, while headline CPI may jump another 0.6%. 

The Eurozone may see a 0.5% rise in the core CPI from last month’s revised figure of 0.1%. 

The Central Banks 

The ECB has already made its latest move, hiking interest rates by 75 basis points last week. 

The Fed will probably stick to at least a 50 basis points hike, if not 75, and the inflation reports are not likely to shake it. However, there is no doubt that Chair Jerome Powell would welcome signs that inflation is at least moderating meaningfully.

The Bank of England, whose meeting was due this week but postponed in the wake of Queen’s passing, faces a more fluctuating environment. The new Prime Minister, Liz Truss, has already issued a major energy plan. Its effect on the market is among the things the BOE will have to weigh; it will also get an employment report as an additional piece of data to throw into the mix. 

Key diary events

Tuesday 13 September

United Kingdom Employment (Aug), Unemployment Rate (Jul), Claimant Count (Aug)

Eurozone SEW Economic Sentiment (Sep)

United States Consumer Price Index (Aug)

Wednesday 14 September

United Kingdom CPI (Aug), Retail Price Index (Aug)

Eurozone President von der Leyen speech

New Zealand Gross Domestic Product (Q2)

Japan Industrial Production (Jul), Merchandise Trade Balance (Aug)

Thursday 15 September

Australia Consumer Inflation Expectations (Sep), Employment Change (Aug), Unemployment Rate (Aug)

Eurozone Balance of Trade (Jul)

United Kingdom Bank of England Minutes, BoE Interest Rate Decision> Postponed to 22 September.

United States Retail Sales (Aug), Initial Jobless Claims (Sep) Industrial Production (Aug), Business Inventories (Jul)

New Zealand Business PMI (Aug)

Friday 16 September

Eurozone Inflation Rate (Aug)

United Kingdom Retail Sales (Aug)

United States Michigan Consumer Sentiment Index (Sep)

Keep an eye out for trading hours changes due to the Queen’s funeral arrangements. LQDFX will update you on any changes. 

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Sources: Reuters, Investing, CNN money