Monetary policy bonanza
- In the US markets seem inclined to price the right outcome (scaling back quantitative policy) for the wrong reasons (focusing on the labour market). Labour data has been improving, however, and we have revised up our US payrolls estimate for tomorrow.
- The Beige Book from the Fed indicated little change in the real economic activity (ongoing improvement, but not spectacular improvement) but reported improving loan demand and easing bank lending conditions. This is consistent with less bond buying by the Fed, but unchanged rates.
- In the Euro area speculation is for more quantitative action, not less, although Draghi has already signalled that it would be unwise to expect further policy action from the ECB this year. Questions about banking union ahead of the 19 December European Council meeting would be of interest.
- The UK Bank of England meeting is not expected to throw up too many surprises, though the Bank has moved to tighten mortgage liquidity of late. The Autumn Statement from the government on fiscal policy may be of more interest, and will probably be a mix of populism and bragging about growth.
Listen to the audio version of this briefing.