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Credit and its consequences

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  • The Bank of England is to publish UK trends in lending data (coming, of course, in the wake of higher consumer price inflation). After over five years of unchanged rates there is a risk that the UK consumer is becoming complacent about leverage, which could accelerate policy tightening.
  • The US Fed's Bullard was talking about US rate hikes coming sooner rather than later. Markets still seem inclined to underestimate the risks of an earlier Fed move. Preliminary July Michigan consumer sentiment is due, forecast to come in unchanged.
  • Weidmann of the Bundesbank and ECB is due to speak, but it seems very unlikely that anything other than the normal undercurrent of hawkishness will come out. Yesterday's inflation data from the Euro area seems likely to mark the bottom of the cycle.
  • The Bank of Japan's minutes were full of no news. In China the price of new homes has slowed further - the growth of credit is a reminder that policy makers are attempting to bolster the economy, the housing data is a reminder of why they need to.

Listen to the audio version of this briefing.