UK, eurozone factories bounce back; US-China tensions rise over TikTok – business live | Julia Kollewe – on August 3, 2020 at 9:48 am

UK factory output at three-year high, Eurozone output highest since April 2018 – PMI surveysGold hits new record high of $1,984.66 an ounceTikTok reportedly relocating to London as Microsoft confirms acquisition plansHSBC steps up 35,000 job cuts amid Covid-19 profit plunge 10.48am BST The FTSE 100 index in London has just turned positive, and is trading at 5,898. 10.14am BST The highlight in the UK this week is the Bank of England’s monthly policy decision and the latest quarterly growth and inflation forecasts on Thursday. We are not expecting any changes to the interest rate or the asset-buying programme.At the June meeting, the BOE’s monetary policy committee kept the Bank rate at 0.1% but pumped a further £100bn into the economy by raising its quantitative easing (QE) programme to £745bn. But the committee also slowed the pace of net gilt purchases to around £6bn a week from £13.5bn previously as liquidity problems in financial markets eased.Our expectation is that the votes on both the policy rate and QE will be unanimous in favour of ‘no change’. But we expect the speed of gilt buying to be reined back further. The Bank of England is due to announce the reverse gilt auction sizes beyond 6 August and has hinted that the programme will run more or less to the end of the year. This suggests a weekly gilt purchase rate somewhere close to £4bn per week in order to meet the total £745bn target at that point. In trying to gauge the policy stance further ahead, we expect the committee to note that the economy has enjoyed further recovery momentum recently … Welcome though this is, it of course reflects the response to the gradual unwinding of the lockdown. Continue reading…

The FTSE 100 index in London has just turned positive, and is trading at 5,898.

The highlight in the UK this week is the Bank of England’s monthly policy decision and the latest quarterly growth and inflation forecasts on Thursday. We are not expecting any changes to the interest rate or the asset-buying programme.

At the June meeting, the BOE’s monetary policy committee kept the Bank rate at 0.1% but pumped a further £100bn into the economy by raising its quantitative easing (QE) programme to £745bn. But the committee also slowed the pace of net gilt purchases to around £6bn a week from £13.5bn previously as liquidity problems in financial markets eased.

Our expectation is that the votes on both the policy rate and QE will be unanimous in favour of ‘no change’. But we expect the speed of gilt buying to be reined back further. The Bank of England is due to announce the reverse gilt auction sizes beyond 6 August and has hinted that the programme will run more or less to the end of the year. This suggests a weekly gilt purchase rate somewhere close to £4bn per week in order to meet the total £745bn target at that point.

In trying to gauge the policy stance further ahead, we expect the committee to note that the economy has enjoyed further recovery momentum recently … Welcome though this is, it of course reflects the response to the gradual unwinding of the lockdown.

Continue reading…


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