Central banks all show interest in looser monetary policy

Today's Highlights

• Central banks all show interest in looser monetary policy

• BOE rate announcement and statement today

 

Current Market Overview

Clear signs of concern over the slowing global economy are evident in the statements of the various central banks that have been in action this week. Yesterday it was the US Federal Reserve's turn to talk of lower interest rates if required and the Bank of Japan followed suit in maintaining its negative interest rate stance even as data in Japan is as buoyant as it has been for a decade or more. The Reserve Bank of Australia is also talking about another interest rate cut or maybe a series of them to new historical lows. 

The European Central Bank is said to be preparing to examine the methods and impacts of further quantitative easing, maybe as soon as July. They publish their economic bulleting this morning, so everyone will scan-read that looking for evidence of the same. Meanwhile the Pound is still glued to €1.1250 and $1.27. 

That is ahead of a bank of England meeting which may signal similar caution to other central banks. I doubt the BOE will be ready to cut their base rate but they are cognisant of the general concern. At 0.75% the UK base rate is, oddly enough, quite elevated compared to the ECB and Japan but lower than the US and Australasia. There is another big story haunting the pound thought. The name of it escapes me but it begins with a B and maybe will be controlled by yet another B based on the Tory leadership voting.  We will also get UK retail sales data this morning, which could go either way. However, April's numbers were good, so May's data is likely to be disappointing. 

You'll have noticed that petrol and diesel prices have been volatile; tracking, as they do (loosely) the volatility in the price of crude oil. The attacks on tankers in the Gulf of Persia, allegedly by Iran, are largely to blame but a drop in crude oi stocks in America have shored the price of crude. That plus the hints of lower interest rates have allowed the USD to drop some of the strength it gained earlier in the week. 

And England's women's football team did enough to overwhelm Japan and emerge from the group stage at the Women's World Cup. I am English and therefore genetically biased but I felt Japan deserved something from the game, such was their tenacity. It was sad to see Scotland out though after failing to consolidate a 3-0 lead against Argentina.