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No additional US tightening yet

| Posted by: Paul Donovan | Tags: Paul Donovan

The US Federal Reserve left its policy unchanged. The big issues – monetary or quantitative tightening, how to offset regulatory easing, how to handle fiscal easing or the mooted Trump tax on consumption – were not addressed. The FOMC statement is far too short to try and tackle such complex policy issues.

The UK House of Commons voted to invoke Article 50 of the Treaty of Lisbon (EU exit).This was not a surprise. The White Paper on the government's approach to leaving the EU is due today. The Bank of England also meets, which is more interesting for markets.

The Trump twitter feed overnight included some strong language about Iran, and that most diplomatic of phrases "a dumb deal" in reference to relations with Australia. Both areas may have market importance – the former given Middle Eastern investors' apprehensions about the US, and the latter given shifting dynamics in Asia-Pacific leadership.

Euro area producer price inflation is due – ECB President Draghi seems to prefer "alternative facts" when justifying his addiction to easing, so rising inflation pressures in this measure may not matter much. The US offers productivity (relevant to the "America First" debate) and unit labor cost (relevant to inflation) numbers.