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Monetary policy deisions past and present

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  • The Fed minutes did nothing to dispel the idea of a gradual scaling back of the $85bn per month bond buying program. There was a range of opinion expressed, of course â€Â“ optimism and caution about the labour market, along with some concerns about low inflation in the US and elsewhere.
  • Euro area inflation has tended to surprise to the downside (seemingly on weaker service sector prices), and this forms the backdrop to today's ECB meeting. With rates as low as they are, it may well be issues around banking union and the monetary transmission mechanism that garner attention.
  • The Bank of England is dealing with the strongest economy in Europe this year (all things are relative), and has already announced that the funding for lending program will be tweaked (moderated) from this month. Forward guidance will doubtless be retained, and equally be ignored in the real world.
  • Euro area consumer and business sentiment comes out. The last couple of years saw things get so bad that they cannot really get much worse, and so markets look eagerly for improvements. There is the standard health warning about the tendency of sentiment data to overreact, of course.

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