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The Most Important Central Bank Releases This Week
Although the RBNZ is likely to hold rates and issue a slightly hawkish statement this week, the biggest market mover could very well be the Bank of England. Recent BOE communications have been on a roller coaster ride from hawkish to dovish and back again, but an August rate hike now appears to be firmly on the table. In their speeches this week, BOE policymakers will likely seek to justify the possibility of an August hike due to flagging UK economic metrics—namely manufacturing and exports.
This hawkish posturing from the BOE may be an attempt to keep pace with their ECB counterparts, who have continued to reinforce the timeline for tapering asset purchases. Across the pond, Fed policymakers are likely to sound more neutral on the heels of a rate hike, though the path appears to be set for two more hikes this year.
RBA policymakers appear content with the current Goldilocks economy of steady growth and low inflation, at least for the time being. Meanwhile, BOC policymakers are struggling to balance the pressures of higher inflation with soft economic data on one hand and persistent trade threats from the U.S. on the other. They may adopt hawkish rhetoric to talk down inflation, but they will have to find a way to sound credible despite the fact that tighter policy remains unlikely in the near future.
The SNB’s balance of payments released this week is likely to indicate that the recent weakness in the CHF was the intentional result of downward pressure that SNB policymakers are likely to maintain, at least through ECB tapering. All in all, this is going to be a busy week in central banking before policymakers begin their rotating vacation schedules through the remainder of the summer.
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The Prattle Team