The Bank of England avoided wrongfooting markets by raising its benchmark interest rate 25 basis points Thursday despite speculation that the Fed’s outsized 75 bps hike less than 24 hours before would pressure the British central bank into doing more.  

Bank policymakers voted 6-3 majority to lift rates to 1.25%, with the same three dissenters as last time – Jonathan Haskel, Catherine L Mann, and Michael Saunders – preferring to raise by 50bps.  

The bank’s Monetary Policy Summary reported that there had been relatively little news in global and domestic economic data since May, although it acknowledged significant movements in financial markets. 

But since its spring meeting, the UK has reported weaker GDP growth for April, as well as continued tightness in the labour market, and sustained underlying nominal earnings growth. Headline annual CPI inflation rose from 7.0% in March to 9.0% in April, close to expectations at the time of the May report.  (LiveSquawk – Continue Reading)

European Central Bank President Christine Lagarde told euro-area finance ministers that the ECB’s new anti-crisis tool will kick in if the borrowing costs for weaker nation rise too far or too fast, according to people briefed on their discussions. 

At a meeting in Luxembourg Thursday, Lagarde explained to ministers that the new mechanism that central bank officials are devising is intended to prevent irrational market movements from putting pressure on individual euro nations as ECB embarks on its first interest-rate hikes in more than a decade, the people said, asking not to be identified discussing private conversations. 

The euro rose 1.2% to $1.0580, its highest level of the session, on the news. (Bloomberg – Continue Reading)

Moscow’s move to slash natural-gas exports to Europe has pitched the continent’s energy crisis into a dangerous new phase that threatens to drain vital fuel supplies and kneecap the continent’s economy.

Russia’s state-owned gas giant Gazprom PJSC throttled deliveries via the Nord Stream pipeline to Germany this week, blaming missing turbine parts that were stuck in Canada due to sanctions.

European officials and analysts dismissed the explanation. They said Moscow was weaponizing gas against European Union members that have imposed sanctions on the Russian economy and supplied weapons to Ukraine. (WSJ – Continue Reading)