IN THE FOCUS: DECISION ON THE INTEREST RATES!
Dear traders,
Today three banks will make a decision on the interest rate: the ECB, the Bank of England and the National Bank of Switzerland. Therefore, be extremely careful!
- The National Bank of Switzerland will publish a quarterly report on monetary policy at 10:30 (Kyiv). Most economists predict that the central bank of Switzerland will decide to keep the interest rate at the level of -0.75%.
It is also expected that the National Bank of Switzerland will adhere to the policy of foreign exchange interventions.
According to the forecasts, the chairman of the National Bank of Switzerland, Thomas Jordan, will repeat that the Swiss franc rate will remain overestimated despite a good economic forecast and a recent depreciation.
Most analysts predict that the central bank of Switzerland will keep the interest rate unchanged until it is raised by the European Central Bank.
- At 14:00 (Kiev) the decision on the interest rate of the Bank of England will be announced.
Analysts do not expect significant changes in monetary policy due to uncertainty about Brexit, low wage growth and weak labor productivity in the UK. All these factors negatively affect economic growth.
Last month, the Bank of England raised its benchmark interest rate by 25 basis points, reversing the downgrade taken after the Brexit vote. The Bank of England returned the interest to 0.5%, but stated that it would very gradually raise the interest rate, while the UK is preparing to exit the EU.
According to the forecasts of market experts, the central bank of the UK will not raise the interest rate until the end of 2018, when it will raise this rate by another 25 basis points.
Also, investors will pay attention to political events, listening to any news about the negotiations on the terms of withdrawal from the EU after the UK and the EU reached an agreement on Friday. It allowed to go to the second stage of negotiations on Brexit, which will determine the further trade relations between the countries . This stage will begin at the summit of EU leaders, which will be held in Brussels on December 14-15.
- The decision on ECB interest rate will be announced at 14:45 (Kyiv). Analysts do not expect significant changes in monetary policy.
The main focus will be on the press conference of ECB President Mario Draghi, which will be held 45 minutes after the announcement of the decision of the ECB. Most likely, Draghi will repeat his statements about the need to support the economy and keep the low cost of borrowed funds in the coming months.
The ECB will also announce the inflation forecast until early 2020. Most likely, according to this forecast, in the coming years prices will grow at a moderate pace to the target level, supporting the decision of the central bank of Europe to restraintly reduce financial incentives.
In October, the ECB announced a reduction in the volume of the monthly repurchase of bonds by half from January. However, at the same time, the European Central Bank extended the quantitative easing program until the end of September, promised many years of soft monetary policy and left open the door for changes in the other direction due to the weak price pressure.
In addition to the decision of the ECB, market players will be interested in information on business activity in the euro area for December, which will come out on Thursday and will allow to assess the strength of the region’s economy.
Good profits, Gentlemen!
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