Global Economic Update

Global Economic Update

The Bank of England Monetary Policy Committee (MPC) voted by a majority of 5-3 to keep the key interest rate steady at 0.25% and the bond purchase programme remained unchanged at £435bn. In the UK, the consumer price index (CPI) rose higher-than-forecast by 2.9% YoY in May, compared to a rise of 2.7% in April.

In the Eurozone, the seasonally adjusted trade surplus narrowed more-than-anticipated to €19.60bn in April, compared to a revised trade surplus of €22.20bn in March. The seasonally adjusted industrial production recorded an expected rise of 0.5% MoM in April, compared to a revised rise of 0.2% in March. The final CPI advanced as expected by 1.4% YoY in May, compared to an advance of 1.9% in April.

In Germany, the final CPI rose as expected by 1.5% YoY in May, compared to a rise of 2.0% in April The Fed increased its key interest rate by 25 basis points to 1.25% meeting market expectations citing continued US economic growth and job market strength. Further, the central bank provided plans to tighten monetary policy despite increasing concerns over weak inflation and stated some details for unwinding its $4.5tn balance sheet. The bank forecast US economic growth of 2.2% in 2017, an increase from its previous projection in March. In the US, the CPI rose less-than-expected by 1.9% YoY in May, compared to a rise of 2.2% in April. Advance retail sales recorded an unexpected drop of 0.3% MoM in May, compared to a rise of 0.4% in April.

The BoJ held the benchmark interest rate steady at -0.1% as widely expected and offered a more upbeat view on private consumption and overseas growth, signalling its confidence that an export-driven economic recovery was broadening and gaining momentum.

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