Bank of England 75bps rate hike expected this week.

In September, the BoE raised Bank rate by 50bps for the second time, but the monetary policy committee was split, with three of the nine member panel voting for 75bps, and one for just 25bps. Since then, a badly received UK minibudget with subsequent many policy U-turns has complicated the outlook for the Bank of England. The Fiscal Statement has also now been pushed back to November 17th.

Following the appointment of a new PM and Chancellor, and a significant change in tack on fiscal policy from the Government, as well as comments from a number of BoE officials, a more modest 75bps rate rise is now expected at Thursday’s MPC meeting, with a move back to smaller hikes thereafter. At the press conference Governor Bailey can expect to face a number of questions on the BoE’s quantitative tightening programme, which starts on Tuesday, as well as where the MPC believes the likely peak in the Bank rate lies.

There is a busy data schedule next week. In the US, the latest US labour market report is due. The consensus is for another solid increase in non-farm payrolls of 220k in October. Meanwhile, the unemployment rate is forecast to edge slightly higher to 3.6%. Average hourly earnings are projected to rise by 0.3% for the third month running. Elsewhere, both the manufacturing and non-manufacturing ISMs are expected to fall in October but remain at or above 50.

In the Eurozone, flash GDP and HICP inflation data feature. The preliminary reading of Q3 GDP from Germany was better than expected, at 0.3% quarter on quarter. The consensus for the Eurozone aggregate number is for a modest 0.2% quarter on quarter expansion in Q3. Meantime, a slight fall in the headline HICP inflation to 9.8% from 9.9% is anticipated in October, although the risk to this forecast is heavily tilted to the upside given poor German, French and Italian data.

Russia has launched massive missile strikes across Ukraine, including the capital Kyiv, causing power and water outages, Ukrainian officials say. In the north-eastern city of Kharkiv, critical infrastructure facilities were hit, the local authorities said. The strikes come after Russia blamed Ukraine for a drone attack on its Black Sea Fleet in the annexed Crimea. On Monday morning, missile strikes were also reported in the central Vinnytsia region, as well as Dnipropetrovsk and Zaporizhzhia in the south-east, and Lviv in western Ukraine.

Economic Calendar

10:00EUR Gross Domestic Product s.a. (QoQ)(Q3)0.2 %0.8%
10:00EUR Gross Domestic Product s.a. (YoY)(Q3)2.1%4.1%
10:00EUR HCIP (YoY)(Oct)9.8%9.9%
10:00EUR HCIP-X F,E,A,T (YoY)(Oct)4.8%4.8%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.