How will inflation affect Carney?; BoE wont hike before the Fed

Ben Kumar, Investment Manager for Seven Investment Management, joined Nick Batsford on the Tip TV Finance Show to discuss UK GDP and Carney, as well as the FOMC, Crude Oil, the Bank of Japan and more.

Inflation situation a problem for Carney

Kumar noted that UK GDP for Q3 came in at 0.5%, and he continued that Carney is looking for growth across the whole year in the UK to be around 2%. He added that the Bank of England will not move before the Federal Reserve, but he concluded that higher inflation may cause Carney a problem in both in terms of growth and an interest rate hike.

Rate hike in the US data dependent

In terms of the FOMC meeting this week, Kumar commented that he doesn’t believe we will see any action. However, he still believed that December is the meeting for a rate hike with the possibility for a strong run-up of data releases before the meeting.

Real expectation ahead of the BoJ meeting this Friday

Kumar outlined that there is a real chance the BoJ may continue with the policy of QE, and unlike most of the global economy, Japan does have deflation where consumers aren’t spending money. He predicted that with the Bank of Japan owning 30% of all government bonds already, it can’t buy anymore, leading to Kumar making the conclusion that he struggles to see what the BoJ can do apart from buying stocks and shares.

Is China following Japan?

Kumar finished on China, where he highlighted that China is following small policies to stimulate the economy rather than the PBoC throwing everything at the economy. However, he added that this could lead them down the same path as Japan.

Watch the video to see further views on Aldi and Lidl, plus Crude Oil and a general Indices overlook.

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