The UK will be in focus in the coming week as it will release some important economic data on international trade and industrial production due on Tuesday and Wednesday, respectively. But what will attract the most attention will be the Bank of England policy meeting and the publication of its inflation report on Thursday.
It is widely expected that the BoE will leave interest rates unchanged at 0.50% as policy makers will unlikely want to take any action ahead of the EU Referendum on June 23. All eyes will be on the BoE Governor Mark Carney’s press conference after the policy announcement on Thursday to see if he will give any hints on the central bank’s intentions on increasing interest rates in the future. Some even say the Bank may need to intervene at some point to revive the UK economy, which has been showing signs of a slowdown recently, based on economic data. This past week, PMI data disappointed and missed forecasts for the manufacturing, construction and services sectors. Economic growth in the UK has been stalling, down from 0.4% in the first quarter to probably 0.2% in the second quarter.
The BoE quarterly inflation report will be interesting to look at on Thursday as it usually provides valuable insight into the central bank’s forecasts of economic conditions and inflation, which are key factors in monetary policy decisions.
From the Eurozone, growth data are due next week on Friday. This will be an updated first quarter GDP report, following from last week’s strong preliminary flash estimate which showed the region’s economy grew 0.6% in the first quarter, more than the expected 0.4% rise and up from the previous quarter’s 0.3% growth. Another important Eurozone data release includes the Sentix investor confidence report on Monday.
The US will release retail sales numbers for April on Friday which should give some insight into consumer spending trends in the world’s largest economy. Since the Fed has said that it is more data dependent now when making policy decisions, any US economic data will be closely watched. The March retail sales figures disappointed and unexpectedly fell but the April number is expected to see a rebound of 0.5% month-on-month.
Also due on Friday from the US is the University of Michigan consumer confidence report. This will be a preliminary version and the index is expected to rise for the month of May.
Data out of China include inflation on Tuesday and industrial production on Saturday. Consumer price inflation came in a little under forecast year-on-year in March, but first quarter industrial production rose 5.8% year-on-year. China is the world’s second largest economy, so its data releases tend to be closely watched.
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