Interest rate decisions dominate next week’s economic data

The UK, EU and US are all going to release their decisions on interest rates next week, which could have tremendous impacts on the respective markets.

UK

Traders will be focused on Thursday for the BoE decision on interest rates at 12:00.

Having remained at 0.1% since the beginning of the Pandemic in March 2020, most are finally expecting a rise to 0.25%.

However, the recent developments in the UK, with Boris announcing we are going into Plan B due to rising cases, have put this rate rise in more doubt, making it even harder to call.

Earlier in the day Markit will release the Manufacturing PMI for December, which should show a current and relevant insight into how the economy is still recovering.

At 58.1, many are expecting further expansion but by how much is debated.

On Tuesday, employment data will be announced as many will be hoping the current unemployment rate of 4.3% will drop, as it has been over the last few months.

Likewise, the Claimant court rate of 5.1% will indicate further the health of the labour market.

Wednesday is also going to be an important day which may have a final influence on the interest rate decision on Thursday as CPI (YoY) data is being released.

The last figure of 4.2% was higher than most expected, and due to recent information, many are expecting a somewhat similar number.

Friday will see the release of Retail Sales, which should give a good indication of consumer spending and behaviour, which considering Christmas is on the horizon, is expected to be strong.

US

Wednesday evening will be the crucial day for the US, as the Fed is going to announce their interest rate decision.

Currently at 0.25%, most are expecting this figure to remain the same, considering the Feds recent views in speeches.

Like the UK, inflation data will be an important part of the week, as PPI data, expected to drop from 0.6%, to 0.5% is released on Tuesday.

Wednesday lunchtime will see the release of Retail sales, expected to fall from 1.7% to 0.7%, as the rush for Christmas may be starting to slow.

Rest of the World

The European Central Bank will be releasing their interest rate decision on Thursday, which most expect to stay at 0%, especially with the virus taking a hold again across the continent.