Bank of England rate setters won’t shock markets with any policy moves when they meet later this week as a struggling economy and Brexit fears offset any concerns over inflation sailing well above target. As Sonia Legg reports, political risks elsewhere are also in focus.
The ECB surprised a few last week by doing very little. This week it's the turn of the Bank of England. Any moves from rate setters there would be a real shock. A struggling economy and Brexit fears are offsetting any concerns over target inflation. (SOUNDBITE) (English) JEREMY STRETCH, HEAD OF STRATEGY, CIBC, SAYING: "We've just seen some construction data for July which was very disappointing and that's perhaps endemic of business investment decisions being postponed and we're seeing the consumer remaining under pressure as the legacy of the falling value of sterling plays out in terms of higher import prices." The UK economy initially withstood last year's decision to quit the EU. But it's slowed sharply in 2017 and is expected to grow by just 0.3 percent - that's half the rate of the euro zone. (SOUNDBITE) (English) JEREMY STRETCH, HEAD OF STRATEGY, CIBC, SAYING: "UK activities will remain very lacklustre over the course of the next few quarters and possibly even through the next couple of years as we continue to grow at a pace which is far below the trend rate of growth." The US has already started tightening but weak economic data suggests it may soften its stance. (SOUNDBITE) (English) JEREMY STRETCH, HEAD OF STRATEGY, CIBC "The debt ceiling issue which had been overhanging the market has been put on the back burner at least for another three months or so. But the question is does that allow or does it provide room for some discussion about fiscal reform moving rather further up the agenda." Hurricane damage is also a distraction in the US, so is North Korea. Trump's reaction to both will be closely watched.