Key Points from This Week
BOC Praise Domestic Recovery
At the Bank of Canada’s September rates meeting held this week, the BOC opted to keep rates on hold, in line with expectations. However, the tone to the meeting as slightly more optimistic than many were expecting with the bank acknowledging that the recovery had occurred at a quicker pace than was expected. The BOC reaffirmed its commitment to keeping rates at accommodative levels for the time-being though did signal that its bond purchases could be altered as necessary.
ECB Cites Quicker Recovery Pace
The ECB held off from any rates adjustments at its September meeting this week, as expected. However, as we saw with the BOC, the ECB praised the strength of the recovery in the eurozone which they noted is taking place at a quicker than forecast pace. The ECB has now revised is growth forecasts slightly higher, projecting an 8% slump this year versus the 8.5% dirge initially forecast.
Key Events Next Week
The Fed meets next week and though no changes in policy are expected, traders will be keen to receive any further details on the recent shift in the bank’s inflation strategy. The fed recently announced its new agenda which includes allowing inflation to run above its 2% target. As such, the barrier to lifting rates has now been increased and traders will be looking to see whether the fed offers any further details on its new inflation mode.
September BOE Meeting
The BOE meeting next week is drawing increasing attention amidst the ongoing Brexit drama. With a trade deal looking less likely by the day, traders will be looking to see how the BOE addresses the situation and the level of threat it attaches to any visible tail risks. Away from the Brexit landscape, the UK economic recovery has been gathering pace recently with key indicators continuing to tick higher. However, the upcoming jobs “cliff edge” is a big threat and traders will also be looking to see how/if the bank addresses this.
Keep an Eye On
UK COVID News
With the number of new infections soaring in the UK, the risk of further government measures has grown materially in recent weeks. The government has been employing local lockdowns as a way of counteracting the increase and has yet to rule out a return to nationwide lockdown measures. With fresh restrictions on social activities having been announced this week, traders will now be monitoring the UK for any further measures which might impede the economic recovery there.
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