The Bank of England (BoE) is set to keep rates on hold next Thursday, but this week’s downbeat employment data gives further support to those who think there will be two further cuts later this year.
Provisional employment figures for May showed a 109,000 drop in payrolled staff, a significant leap from April’s 55,000. May’s number is likely to be revised down in future, but the direction of travel was confirmed by news of slowing wage growth – a key metric for the central bank. The annual rise in weekly wages excluding bonuses fell to 5.2 per cent in the three months to April, below the prior reading of 5.5 per cent.
In response, markets have moved to fully price in a September rate cut from the BoE. We shouldn’t be surprised – for all the toing and froing from investors (and Monetary Policy Committee members), the BoE has cut rates once a quarter since last August. Further cuts in September and December would be consistent with that approach.
China: House prices, industrial production, M2 money supply, retail sales
UK: Rightmove house price index
Japan: BoJ interest rate decision
US: Business inventories, imports/exports, industrial production, retail sales
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Eurozone: CPI inflation, current account
Japan: Imports/exports, machinery orders
UK: CPI + RPI inflation, DCLG house price index
US: Fed interest rate decision
Eurozone: Construction output
UK: BoE interest rate decision
Eurozone: Consumer confidence
Japan: CPI inflation
UK: Public sector net borrowing, retail sales