After the markets ended the US Federal Reserve’s party yesterday, Wednesday, and paved the way for faster monetary policy tightening in the coming year, attention turns today to the meeting of the second and third central banks in terms of importance in the world, namely the European Central Bank and the Bank of England to announce monetary policy at the last meeting of central banks for the year current.
Bank of England
In the European session, or around 3 pm Mecca time, the Bank of England will announce its monetary policy and interest rates, as the bank is expected to keep interest rates unchanged at 0.10% with a majority of 7 members and vote on the bank’s asset purchases at 875 billion by a majority of 6 members to three.
Inflation data from the United Kingdom, which was announced yesterday, Wednesday, where the CPI rose by 5.1% in the 12 months ending in November, compared to 4.2% in October, exceeding expectations that indicated a rise to 4.8%, recording its highest level since the year 2011 after rising By 0.7% on a monthly basis in November, it will put more pressure on the bank.
Interest rates, so will the bank prefer to wait until it sees the impact of the Omicron variable on the economy, especially after the restrictions imposed by the government last week, or will the bank have to intervene, bearing in mind that the first meeting of the bank is coming in February of the year The coming period is a long time in light of the anxiety caused by the accelerating inflation.
In the event that the bank indicated that it prefers to wait until it sees the impact of Omicron on the economy, the movement is expected to be negative, but weak in the British pound.
European Central Bank
At 3.45 minutes Mecca time, the European Central Bank will, in turn, announce its monetary policy and interest rates to keep European Central Bank President Christine Lagarde on monetary policy unchanged and to maintain zero interest rates this week.
The interest announcement and statement will be followed in 45 minutes by the press conference of Bank President Christine Lagarde, where the European Central Bank is so far less concerned about high inflation than the rest of the other banks, despite the rise in annual inflation in the euro area to 4.9% in November in the preliminary reading, compared to 4.1% In the October reading, where Lagarde still sees that the rise is temporary, the question today is whether Lagarde continues to tweet outside the flock despite Jerome Powell’s acknowledgment that inflation is not temporary, or will she change her view of inflation and admit that intervention must be made.
The current program of the European Central Bank purchases 80 billion euros of bonds per month, of which 60 billion are under the PEPP program, which is scheduled to end next March, in addition to purchasing 20 billion dollars under the APP.
Therefore, part of the focus of the meeting today will be on the available options around Adaptation of the APP after March. The euro’s movement today will be based on Lagarde’s view of inflation, and if she continues to mention the word inflation is temporary and focus on more Omicron’s risks, the euro will be exposed to selling and vice versa.
05/11/2024
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