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June 19, Rancesco Pesole, a foreign exchange strategist at ING Bank, said that the problem now is that the Bank of England decided not to provide any forward guidance. This means that the market needs to interpret the details very carefully to judge the direction of policy or assess the timing of the next interest rate cut. The past month has been quite bad for the UK, with performance below expectations in all aspects, inflation slightly below expectations, and weak economic growth... For the Bank of England, all this seems predictable. The yield curve has not changed much because it basically recognizes the markets expectations, that is, one meeting to keep interest rates unchanged and one meeting to cut interest rates.Bank of England Governor Bailey: The statement that we expect interest rates to gradually fall does not represent a forecast for August.On June 19, David Kelly, chief global strategist at JPMorgan Asset Management, said that the Federal Reserve may keep interest rates unchanged until the end of this year. He pointed out that if inflation is expected to rise due to tariffs, it will not subside until 2026. "By the end of next year, the economy should cool down. Inflation should cool down, and maybe they will give us some lower interest rates." "Now, dont hold your breath for low interest rates from the Federal Reserve, because they dont seem to have any intention of providing low interest rates."Gazprom CEO meets with Hungarian Foreign Minister.On June 19, Nick Rees, head of macro research at Monex, said that the Bank of England still seems to be sticking to the rhythm of cutting interest rates once a quarter. Although some comments have begun to downplay the rate of interest rate cuts originally proposed by Bailey, although this may not be an official statement, it seems to be their plan. The biggest highlight of this meeting was the 6-3 vote difference. This is dovish in the market consensus, and the market will interpret the signal from it, but I think it will have limited impact on the specific actions of the Bank of England in the future.

As Japan Prepares for BOJ Amamiya to Handle Monetary Policy, the EUR/JPY Rebounds from 142.00

Daniel Rogers

Feb 06, 2023 16:09

After falling to approximately 142.00 during the Asian session, the EUR/JPY pair has made a robust recovery. According to a Nikkei article published by Bloomberg, the Japanese government is aiming to recruit Bank of Japan (BoJ) Deputy Governor Masayoshi Amamiya to replace Haruhiko Kuroda as the head of the central bank.

 

In February, the nominees for Kuroda's replacement will be finalized, and discussions for a change from the ultra-loose monetary policy of the past decade will intensify.

 

The BoJ has already widened the yield curve to boost flexibility. Deputy Governor of the Bank of Japan Masazumi Wakatabe noted last week, "BoJ's December decision to broaden band was a necessary step to make YCC more sustainable, but the move alone may have undermined the effect of the stimulus."

 

For renewed impetus in the Eurozone, investors anticipate the release of Retail Sales data. The economic statistics is expected to drop by 2.7% annually, compared to the prior annual contraction of 2.8%. It is projected that the monthly data will decrease by 2.5% compared to the 0.8% growth reported earlier.

 

The Eurozone economy has suffered a decrease in consumer spending for five consecutive months, which will satisfy the European Central Bank (ECB) as it reduces its forecasts for the Consumer Price Index (CPI).

 

Pierre Wunsch, a member of the ECB Governing Council, told Reuters on Friday that the ECB will not reduce its benchmark interest rate from 50 basis points (bps) in March to zero in May. May might see a 25 or 50 basis point increase, according to Wunsch.


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