Market insights

Good morning,

The FED hiked their interest rate to the expected 4.5%. In an effort to continue curbing inflation the Federal Reserve in the US raised it's base rate by 50 points to 4.5%. Whilst this appears to be a steep increase in a short space of time the reality is it has just brought the base rate back to a more "normal" level. Historically rates in developed countries sit between 4% and 6%. What's actually been unusual in recent times is for base rates to be at nearly zero.

Today sees the Bank of England have its go. The BoE is expected to follow suit and raise its base rate by 50 points (0.5%) to 3.5%. With inflation at 10.7% this looks to be nailed on. The question is whether the Monetary Policy Committee decides to go further. One of the interesting pieces of information out will be the vote count. With 9 votes across the MPC the expectation is for all 9 members to vote for the 0.5% hike.

As if that wasn't enough the ECB has its interest rate decision not long after the BoE's decision. Analysts are again expecting a 0.5% hike to 2%.

There could well be a good deal of volatility in GBP/EUR rates today.

Yesterdays expected numbers meant there was little change to rates across the board in the run up to this lunch time, and with such heavyweight news scheduled this lack of volatility could continue until the news starts coming out.

Following the UK and Euro centric news there's retail numbers out from the US followed by a press conference by the ECB.

Today sees the start of industrial action by nurses. It's difficult to imagine a sharper end of the strike action than those that take care of us in our time of need. That's the headline that looks to be dominating business news today.

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Today’s Economic Calendar

UK: 12:00 BoE Interest Rate Decision

UK: 12:00 BoE Asset Purchase Facility

UK: 12:00 MPC Vote Count

UK: 12:00 MPC Monetary Policy Summary

EUR: 13:15 ECB Interest Rate Decision

EUR: 13:15 ECB Monetary Policy Decision Statement

US: 13:30 Retail Sales

EUR: 13:45 ECB Press Conference

UK: Friday 00:01 Gfk Consumer Confidence

UK: Friday 07:00 Retail Sales

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As ever we look forward to keeping you in the loop and look out for our next update.

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