BOC SAYS DOESN'T NEED TO ALTER PATH OF QT RIGHT NOW

this is a test, please ignore

MNI BRIEF: Text of Bank Of Canada Interest-Rate Decision

MNI China Daily Summary: Wednesday, July 24

MNI: PBOC Net Drains CNY203.9 Bln Via OMO Wednesday

MNI: PBOC Sets Yuan Parity Higher At 7.1358 Weds; -0.98% Y/Y

US Treasury Auction Calendar

EZ/UK Bond Supply Calendar: BTP Short Term and BTPeis on Thursday

EZ/UK T-Bill Calendar: Italy, UK Auction on Friday

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

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Week Ahead

UK
  • Last week’s MPC was less hawkish than markets expected but more positive than some economists expected. We therefore saw some analysts bring forward their expectations of the next hikes (but there were only a few who raised their expectations of the terminal rate). Markets, on the other hand, saw a more substantial repricing but still almost fully price in one 25bp hike for each of the remaining MPC meetings this year (and price in small probabilities of 50bp hikes for the next three meetings). The MNI Markets team thinks that the MPC will hike again by 25bp in June: if you’re worried inflation expectations are rising, it doesn’t make sense to wait until August, even if you are also concerned about growth (it’s easier to cut later than let inflation expectations get out of control). The MPC’s forecasts also imply that probably two more hikes are needed to get inflation under control at the three year horizon. We think the MPC will follow up in August – although this is less certain because the Bank’s actions will probably be dependent upon a new set of forecasts in the MPR. For the full MNI BOE Review, click here.
  • There has been a notable reduction in MPC post-meeting communication. Saunders is the only MPC member due to speak this week (at the Resolution Foundation at 14:00BST on Monday). His speech is entitled "Where does monetary policy go in a low rate, high inflation, unstable economic environment?" Recall that he is one of the most hawkish members of the MPC and voted for a 50bp hike last week. Also note that Saunders will be leaving the MPC on 8 August (so his last contribution and vote will be at the August MPC meeting).
  • Elsewhere we will see the first print of Q1 GDP, alongside March activity data (including monthly GDP, IP, index of services and trade). We have to wait for next week for the next labour market, inflation and retail sales releases.
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