Forex Market Analysis

BoE & ECB hold their rates, US CPI to fall off expectations


The Bank of England kept interest rates on hold on Thursday and highlighted greater financial market concerns about Brexit, a month after raising borrowing costs for only the second time in more than a decade.

“Since the Committee’s previous meeting, there have been indications, most prominently in financial markets, of greater uncertainty about future developments in the (European Union) withdrawal process,” the central bank said.


BoE staff raised their forecast for third-quarter growth to 0.5 percent from 0.4 percent, partly due to stronger consumer spending over an unusually warm summer.

Earlier on Thursday, Governor Mark Carney – whose own term was extended this week until January 2020 to help smooth the post-Brexit transition – briefed May and senior ministers on preparations for a ‘no deal’ Brexit.

Carney warned legislators last week that if Britain left the EU without a trade deal, economic difficulties could squeeze British households’ incomes for years to come.

The central bank said on Thursday that risks to global growth had risen, especially if the United States and China implemented protectionist trade measures.



The European Central Bank left interest rates on hold Thursday, in a widely anticipated decision, and reiterated that rates will remain unchanged at least through the summer of 2019.

The ECB also repeated that it expects its asset purchase program to end in December after halving it to €15 billion per month starting in October, from €30 billion at present.

The euro zone monetary authority had announced plans to wind up its massive bond purchasing stimulus program at its June meeting.

Here’s the ECB’s growth & inflation forecasts of 2018,2019,2020

ECB growth forecasts:
ECB Sees 2018 Economic Growth at 2% vs. 2.1% in June
ECB Sees 2019 Economic Growth at 1.8% vs. 1.9% in June
ECB Sees 2020 Economic Growth at 1.7% vs. 1.7% in June


ECB inflation forecasts:
ECB Sees 2018 Inflation at 1.7% vs. 1.7% in June
ECB Sees 2019 Inflation at 1.7% vs. 1.7% in June
ECB Sees 2020 Inflation at 1.7% vs. 1.7% in June




US consumer price index came steady such as the previous reading at 0.2% but less than expected 0.3% which may put some pressure on the Federal Reserve to gradually raise interest rates.

The U.S. central bank is widely expected to hike interest rates two more times this year, with the next move higher coming at its September 25-26 meeting. but odds for another move in December have decreased with this soft data.


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