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Livesquawk - Closing Wrap - Tuesday 08.06
Closing Wrap - Tuesday 08.06
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ECB Likely To Stay On Hold, Avoid Taper Talk

The only thing “normal” about this year is that the word is part of another word which sums up the current situation: abnormal.


This condition also rings true for Europe’s monetary policy and those who make it. A case in point is the unprecedented EUR 1.85 tln Pandemic Emergency Purchase Programme (PEPP), which keeps chugging along. “Normally,” this is the time of year for European Central Bank officials and staffers to start counting clean socks ahead of their annual sojourn to Sintra, Portugal later this month for the lender’s retreat-cum-banking forum, an event that in the past has spawned some pretty market-shaking commentary from ECB presidents. 


But not this year. The Sintra event – normally scheduled in mid-June – is to be held as a virtual conference in September, and central bank watchers may have to wait at least that long for the ECB to begin talking about shifting its policy gears.


Few central bank mavens expect the ECB to make waves this week. The European recovery has been fitful at best, inflation in the single-currency area is now hotter than a two-dollar pistol, and the sluggish vaccination programmes on the Continent mean that some countries are still restricting commerce. The budding rebound following the first quarter drop in GDP is combining with surging consumer prices to leave policymakers little wiggle room, so there will likely be little, if any, wiggling on Thursday. (LiveSquawk - Continue Reading)

BoC Set To Leave Policy Unchanged As Economy Reopens

Canada’s economy is outperforming the forecast of the country’s central bank, with rate setters saying households and businesses are exhibiting “impressive resilience” despite the pandemic, and the national vaccination programme is ahead of schedule. However, do not expect the Bank of Canada’s monetary policy committee to announce any major tightening measures at the conclusion of its meeting.


The bank’s governing council is widely anticipated to keep its benchmark interest rate at 0.25% on Wednesday, and the quantitative easing programme is set to continue at a pace of CAD3bln a week. Policymakers are unlikely to signal a further reduction in the bank’s quantitative easing programme this month.


James Knightley of ING said, “We do not expect this policy meeting to deliver any substantial surprise for markets. After shifting to a hawkish bias at the April meeting, the data flow in Canada has on balance been neutral for rate expectations.” (LiveSquawk - Continue Reading)

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