No “lift-off” on bank rate in US

Jul 30, 8:11 am
Market news

In the US, Fed has decided with 100% of votes that the interest rate should be kept at the same level as in the past months. Although the decision was widely debated in the statement, there are no hints about a future lift-off. The target range of the federal funds has also remained unchanged at 0-0.25%, the manifest offering stable labor market improvement and inflation setback as reason for a future increase to 2% on medium term. This being said, analysis show that the labor market continues its improvement, the stable jobs number growing and the unemployment decaying. FOMC declared that, although the symmetry, risks are still just outside the door and characterized the labor market as “nearly balanced”. Inflation is believed to remain at nearly the same level as before, although it can be foreseen a future gradually upset around the 2% threshold as the fall in the energy sector and the dissipation of prices are already starting to take their toll.

In what concerns the GBP, BoE (Bank of England) published yesterday in the “Money and Credit” report the mortgage approvals figure with and increase to 66,582 in June. This value exceeds the revised 64,826, outgrowing market expectations. The secure lending for dwellings rose by 2.6 BGBP, reaching its highest point since July 2008. The report on Wednesday also contained the data for the consumer credit evolution, which we can find that also rose by 1.2 BGBP, above the 6-month average with roughly 0.4 BGBP.

Japan, the world’s 3rd largest economy, declared that retail sales grew with an annual percent of 0.9 in June, exceeding the expected 0.5 but also being well below May’s 3% figure. This report precedes the government’s recently contraction of consumer prices forecast. Expectations in the present are for an approximately 0.6% rise in 2015, with a previous estimation of 1.4% reduce in the new light of declining oil prices.

Speaking of oil, WTI’s (West Texas Intermediate) barrel closed yesterday above the $49.00 threshold. Prices have taken this hike mainly because of the EIA report showing a downfall of 4.2 million barrels last week, high above forecasted values. Looking at yesterday’s evolution, we can see that a barrel was trading on the WTI at around $47.70 right before the news about the EIA report, exploding to a 3-days high at around $49.50 at the moment of announcement.

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