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Full statement of the BOE August monetary policy meeting decision

  
  Analysis
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The full statement by the BOE on its August policy decision

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. In that context, its challenge at present is to respond to the economic and financial impact of the Covid-19 pandemic. At its meeting ending on 4 August 2020, the MPC voted unanimously to maintain Bank Rate at 0.1%. The Committee voted unanimously for the Bank of England to continue with its existing programmes of UK government bond and sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, maintaining the target for the total stock of these purchases at £745 billion.

The Committee’s projections for activity and inflation are set out in the accompanying August Monetary Policy Report. Although recent developments suggest a less weak starting point for the Committee’s latest projections, it is unclear how informative they are about how the economy will perform further out. The outlook for the UK and global economies remains unusually uncertain. It will depend critically on the evolution of the pandemic, measures taken to protect public health, and how governments, households and businesses respond to these factors. The MPC’s projections assume that the direct impact of Covid-19 on the economy dissipates gradually over the forecast period. Given the inherent uncertainties regarding the evolution of the pandemic, the MPC’s medium-term projections are a less informative guide than usual.

Global activity has strengthened over recent months, although it generally remains below its level in 2019 Q4. Covid-19 has continued to spread rapidly within a number of emerging market economies, however, and there has been a renewed rise in cases in many advanced economies. (more…)

ECB meet this week (preview) but they are already driving the higher euro

  
Analysis, Forex
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As was noted during the US time zone, EUR/USD pierced 1.14. A factor that appears to have flown under the radar is this sign of (continued) aggressive policy support from the ECB, that is:
  • ECB corporate bond-buying was up 3.3bn EUR last week, which is around 400m higher than the previous record high over the past 4 years operation of the Bank’s corporate bond purchasing program
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ps, ICYMI, the EU Recovery Fund will be the discussion point of note for markets in the ECB meeting Thursday
  • financing totalling up to EUR750 bn, split between grants of EUR500 billion and loans of EUR250 billion
  • Netherlands, Austria Denmark and Sweden want to reduce the amount of funds distributed as grants

The “BUZZ WORDS” for 2013

  
Analysis, Education
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In this global “LOW-GROWTH” macro-economic environment, I would use the following “BUZZ WORDS” to define World Central Bank and global market activity for 2013, as I see it at present.

*(I may update this list as the year progresses, as various scenarios become clearer, and as new events unfold.)

“MONEY PRINTING” and “EASY MONEY”

  • the Fed (and other Central Bankers around the world) provides low interest-rate loans to Banks
  • Banks are supposed to make this money available to companies and individuals at low rates that they deem appropriate (however, as demand for loans picks up, no doubt the Banks will raise interest rates, even though the Fed may not…a risk that will have to be factored into a company’s costs)
  • the Fed’s goal is to produce a “WEALTH EFFECT” (precisely who will benefit remains to be seen)
“INFLATE”
  • wholesale and retail prices of goods and services
  • price of stocks, commodities, etc.
  • taxes (more…)
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