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As Storm Ciarán battered southern England, the Bank of England kept rates on hold (Jono Photography / Shutterstock.com)
Yesterday there was little reaction in the markets to the unsurprising news that the Bank of Engand (BoE) was holding interest rates at 5.25%.
It followed the European Central Bank (ECB) and US Federal Reserve also pausing interest rate rises over the past few days.
However, the BoE did take a relatively hawkish stance overall and in its Monetary Policy Report. Not only did three members of the nine-person Monetary Policy Committee (MPC) vote for another rate rise, but the governor Andrew Bailey said that the MPC would watch out for the need for further rate rises, and: “It’s much too early to be thinking about rate cuts.”
He also said that he expects inflation to be below 5% in its next reading and that there is 50-50 chance of recession next year.
The pound lost around half a cent against the euro before and after the decision, until the markets caught up with the hawkish comments and GBP/EUR revived. Sterling recovered a little against the US dollar.
The promise of an end to rate rises was good news for the stock markets, however, with the FTSE 250 strengthening by 3%.
Elsewhere in business news, in New York the cryptocurrency wunderkind Sam Bankman-Fried was convicted of fraud and faces decades in prison. As the US attorney said: “the cryptocurrency industry might be new… this kind of corruption is as old as time”
In the UK, a more successful/luckier new-tech magnate Elon Musk was in conversation with UK prime minister Rishi Sunak. Musk said that artificial intelligence (AI) would eventually render all jobs obsolete.
In the meantime, enjoy your weekend!
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GBP: Markets appraise Bank of England mood
The pound entered the new month marginally weaker (0.4%) than the start of October, but largely unchanged for the past fortnight.
Several members of the MPC will be talking today in the wake of the Bank’s decision to hold interest rates at a 15-year high for the second month. These include Huw Pill, the BoE’s chief economist and inventor of the Table Mountain analogy for keeping interest rates high for an extended period. It will be interesting to see if he develops that argument.
There are some reports coming out for more expensive purchases in the early part of next week, with new car sales on Monday and house prices on Tuesday. The big event of next week will be GDP on Friday, however.
GBP/USD past year
EUR: German exports fall
While nothing to write home about, it was a marginally positive day for the single currency against most major rivals.
Data releases contained a few surprises, including German unemployment worsening, but new car sales in Spain shooting up by 18%.
We’ve just heard that the German Balance of Trade was in line with expectations for the month overall, but with both imports and exports falling far more than expected. Exports fell 2.4% in September, more than double the level expected. Good news for the UK, however, with exports to Germany rising at twice the rate of imports from Germany.
We will shortly get some European employment data.
USD: Will Non-Farm Payrolls shock again?
After Wednesday’s sharp falls, the dollar was stable yesterday.
Following the interest rate decision on Wednesday (rates were kept on hold), there was little data yesterday.
Later today we will have the second of the week’s employment reports. JOLTS Job Openings on Wednesday showed more new job openings than expected, but what will Non-Farm Payrolls tell us? Last month they were double the rate expected, with 336,000 new jobs.
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