Morning Brief – Bank of England

Bank of England

Yesterday the BoE was closely watched for two forecasts and also for confirmation that interest rates would be left unchanged as was expected by the markets. In the event, interest rates were indeed left at 5.25% and the forecast for inflation is that it is set to fall from its current 3.2% to close to the 2% target rate in the next couple of months. That inflation target is for a sustainable medium term rate of 2%-and that soundbite from the press conference is key.

As for the UK economy the forecast remains that there will be growth but just not much of it with a 0.4%% increase in GDP in Q1 2024 to be followed by an anaemic(my word) increase of 0.2% in Q2. An interest rate cut in June should ”neither be ruled out nor taken as a fait accompli”.

That’s Central Bank speak for you but hardly unexpected given the balance in the voting this time around which shows the Committee inching towards the necessary majority for a rate cut. That was enough however for the sifters of the tea leaves: rate cut coming sooner than later and so…. GBP dutifully sold off.

GBP/USD 1.2475.

National Minimum Wage in the EU

22 of the 27 have a minimum wage but 5 do not and they are not the ones one might suspect: Italy, Denmark, Austria, Finland and Sweden. Then there is the range between the top and foot of the table which is enormous even stripping out the smallest minimum monthly wage in North Macedonia of just EUR 360. At the top of the tree is Luxembourg-not nul points- at EUR 2571. Spain however is EUR 1323 while Greece is just above EUR 900.

GBP/EUR 1.1617.

US Farm Equipment

Following Covid, farm machinery was in demand and as was perhaps inevitable manufacturers produced too much machinery. Now with lower crop prices-for example soy and corn prices are at 3 year lows-and interest rates at unaffordable levels for squeezed US farmers, new equipment purchases are on hold. So if you are looking for a new tractor and happen to be in Norton, Kansas it is your lucky day: 30% discounts and the opportunity to finance such a purchase at zero per cent.

USD/JPY 155.70.

Rain in Spain

While it may be in the plain, for the 6 million citizens of Barcelona who have been restricted to 200 litres of water daily, the past few weeks of rain have eased those restrictions to 230 litres. Additionally the Catalonian authorities have, they claimed, improved their ability to manage water which will help. Cynics suspect that the claim for this sudden improvement in water management skills has everything to do with the elections in 3 weeks time and very little with water ..or management.

EUR/USD 1.0754.

You Can’t Always Get What You Want

Who knows what Keith Richards was doing climbing a palm tree in New Zealand, but it ended well with KR being discharged from hospital this day in 2006 and emerging if not exactly unscathed, certainly seemingly none the worse. Readers who have half an hour would do well to listen to the Desert Island Discs library and download the podcast with Keith Richards giving his take on the palm tree incident and much else.

I saw her today at the reception
A glass of wine in her hand
I knew she would meet her connection
At her feet was her footloose man

No, you can’t always get what you want
You can’t always get what you want
You can’t always get what you want
But if you try sometime you’ll find
You get what you need

I saw her today at the reception
A glass of wine in her hand
I knew she was gonna meet her connection
At her feet was her footloose man

You can’t always get what you want
You can’t always get what you want
You can’t always get what you want
But if you try sometimes, well, you might find
You get what you need
Ah, yeah
Oh

And I went down to the demonstration
To get my fair share of abuse
Singing, “We’re gonna vent our frustration
If we don’t we’re gonna blow a fifty-amp fuse”
Sing it to me, honey

You can’t always get what you want

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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