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The MPC kept the Bank rate on hold at 0.5% at its meeting today and also maintained the asset purchase target at £375bn, in line with market expectations.
The ECB Governing Council (GC) kept key rates unchanged today, with the refi rate at 0.25%, the deposit rate at 0.0% and the marginal lending rate at 0.75%.
A decision by Ukrainian President Yanukovych to backtrack on an EU Association Agreement in favour of a $15bn bailout from Russia, at the end of 2013 sparked unrest in Kiev, turning violent in recent months, before eventually forcing him to flee to Russia.
February’s US jobs numbers at the end of next week will be critical in terms of markets, following two weak months. A third soft outturn would be difficult to ascribe solely to cold weather and while the Fed might be willing to ignore it and continue tapering by $10bn at its 19 March meeting, investors could begin to reappraise the strength of the US recovery.
Recoveries still broadly on track?
Ahead of the March ECB Governing Council meeting, February’s flash eurozone CPI estimate will be a key piece of information following January’s (flash) reading of +0.7% (yoy). On the economic activity front, German and Spanish GDP figures will be eyed for confirmation of the preliminary estimates, while Germany’s IfO business climate index will provide an important barometer of activity in February.
Figures on January’s public finances were released earlier this morning, marking the last official borrowing data ahead of the Budget on 19 March. These were disappointing. January’s underlying borrowing (i.e. PSNBX less Royal Mail and Asset Purchase Facility flows) recorded a surplus of £4.7bn, against consensus expectations of a surplus of £8.0bn (Investec forecasts £7.5bn).
February’s MPC minutes showed that the committee voted 9-0 both to keep the Bank rate at 0.5% and to maintain the asset purchase target at £375bn. Any other result would have been a major surprise.
CPI inflation edged down to 1.9% in January from 2.0%, moving below target for the first time since November 2009.
The timeline highlights the currently scheduled events likely to be of most significance for market sentiment over 2014.