Live Chat
European stocks rise

European stock markets rose early on Wednesday. US stocks hit a record high again on Tuesday but were closed on Wednesday for a holiday.

The pound was steady ahead of the Bank of England decision, with policymakers likely to stand pat on rates despite inflation coming down to target for the first time in three years. US weekly jobless claims and the Philly Fed manufacturing index are also due up.

BoE's Rate Dilemma: Cut or Hold?

In May, after holding again, Bank of England Governor Bailey indicated that a rate cut in June was a possibility. “Before our next meeting in June, we will have two full sets of data – for inflation, activity and the labour market – that will help us in making that judgment afresh,” he said.

“But, let me be clear, a change in bank rate in June is neither ruled out nor a fait accompli.”

Why not cut now?

Wage growth is still strong at around 6%, services inflation at 5.7% - there are reasons to be cautious.

But the labour market is softening - unemployment unexpectedly jumped to a two-year high 4.4%, the biggest monthly jump since the GFC, outside of the Covid era. And there is an election coming.

Cuts Unlikely with Election Incoming

I think the BoE could surprise with a cut today, but an election two weeks away means this is not likely. What it should do and what it will likely do are not necessarily the same thing.

My worry is that the BoE stays too high for too long because it is looking at the lagging wage data rather than the weakening labour market. I fail to see any reason for the Bank to be holding off any longer – time to take a leaf out of the ECB playbook and trim some of the restriction.

Swiss National Bank Takes the Plunge

The Swiss National Bank (SNB) surprised markets by cutting rates by 25 basis points, even with a slight inflation increase. The SNB's revised inflation forecast, projecting a return to 1% by 2026, suggests a more dovish stance that could influence other central banks.


When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.

Latest news

Friday, 11 October 2024

Indices

Gold performance 2024 and how much will gold price increase in Q4?

Stocks retreat from recent highs as US inflation comes in stickier than expected

Friday, 11 October 2024

Indices

Stocks retreat from recent highs as US inflation comes in stickier than expected

ECB set to cut rates for the third time this year

Thursday, 10 October 2024

Indices

Week ahead: ECB set to cut as Wall Street earnings season gathers pace

Thursday, 10 October 2024

Indices

Dollar fluctuates after CPI Inflation and Jobless Claims came in stronger

Live Chat