Carney and Bernanke due to up the volatility

• Bank of England minutes may switch to forward guidance from quantitative easing

• Bernanke due in front of Congress

• Greek austerity and Spanish censure discussions in Europe

Yesterday’s UK inflation number did little to clarify the price situation and, hopefully therefore, the attitude of the Bank of England’s Monetary Policy Committee towards further loose monetary policy. CPI here in the UK rose to 2.9% in the year through June, up from May’s reading of 2.7%.

Increases at the petrol pump are the most obvious reason for the increase in prices over the past month with the a weak pound also keeping import costs high in the short-term. The rise to 2.9% will not stand in the way of any expansionist monetary policy from the MPC in the coming meetings; a reading above 3% may have seen some members of the rate setting committee hold fire on a vote to forward guide that rates will remain low in the UK for an extended period of time.

Chatter around forward guidance will be what the market is looking for in today’s release of the latest round of Bank of England minutes at 09.30. The accompanying statement to this month’s Bank of England decision has allowed us to peek behind the curtain and see the initial thoughts of the Carney MPC; today we will be able to get a better, deeper understanding of how he wishes to move the MPC.

The most likely voting record is 7-2 in favour of no increase in asset purchases with Carney avoiding the trap of being outvoted in his first MPC meeting. The voting record may help sterling if David Miles and Paul Fisher, the members who alongside Mervyn King have been outvoted consistently for more QE, are persuaded to show a united front in favour of forward guidance and not further asset purchases.

Competing with all that we also have UK unemployment data at 09.30 and we will be looking to see by just how far wages are being outgrown by inflation. Today’s weekly earnings figure is expected to come in at less than half (1.4%) of yesterday’s CPI number.

Another central banker pitches in as well today as Ben Bernanke delivers his semi-annual testimony to the House of Representatives at 3pm BST. Details of his speech will be available from 1.30pm BST and the hope is that we are given some form of clarification to last week’s dovish commentary. He has been hawkish, he has been dovish in the past; it would not surprise me if his comments today had the poise of a high-wire trapeze artist.

The Fed’s Beige Book of regional Fed surveys are due at 7pm BST and should provide us with a better in-depth look at the US economy but should be overshadowed by Bernanke.

The political situation in Europe continues to rumble on with Greek state workers returning to offices after yesterday’s general strike. Antonis Samaras, the Greek PM, will today seek approval from the country’s parliament to impose fresh austerity measures in a bid to guarantee further bailout funds.

In Spain, the opposition Socialists have threatened to call for a censure motion of Mariano Rajoy in the Spanish parliament in relation to the recent slush-fund allegations. Rajoy’s Partido Popular should be able to fight off the motion given their majority within the parliament, but that will not prevent further chatter and comment around the issue as a whole.

Elsewhere, the Bank of Canada is expected to hold rates at 1% at its decision at 3pm BST.

Have a great day.

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