Weekly Market Outlook: RBA & BoE Meetings

The economic calendar for the week ahead will continue with the RBA and the BoE holding their respective monetary policy meetings. Although no changes will be made, the monetary policy meetings stand out among a host of other things.

Most of the economic data over the week focus on a mix of high-impact events and some second-tier data. Most noticeably, the new ECB President Christine Lagarde will be giving a speech on Monday.

Investors will keep a close eye on Lagarde in order to gauge what the future monetary policy direction of the ECB will be.

Data from the United States will see the release of the ISM non-manufacturing PMI report. Besides the NMI report, it is a relatively quiet week for the dollar. There are a number of Fed members who will take turns this week.

The Fed speech lineup comes on the back of last week’s Fed rate cuts, which the central bank said it would pause for the remainder of the year.

Here’s a brief look at the key economic events coming up for the week ahead.

RBA Interest Rate and Retail Sales Report

Focus turns to Australia this week which has a somewhat busy calendar. The week starts off with the retail sales report followed by the RBA meeting. Later in the week, the RBA will also be releasing its meeting minutes.

Retail Sales to Chug on at a Steady Pace

The monthly retail sales report is due on Monday.

Economists forecast that Australia’s retail sales will rise by 0.4% in September. The data comes after retail sales in August also rose 0.4%. However, the results were disappointing compared to the forecasts.

The data was weaker despite the policy stimulus in the economy. This includes refunds on income tax and interest rate cuts.

A disappointment on the data will no doubt keep the bearish sentiment alive.

RBA to Leaves Rates Unchanged

The Reserve Bank of Australia will be holding its monetary policy meeting later in the week.

The RBA meeting, which is due on Tuesday, will see officials leaving interest rates steady at 0.75%.

Interest rates in Australia have been cut to historic lows this year. The central bank hopes that the lower rates will boost inflation and also give a kickstart to the economy.

As a result, within the larger scheme of things, the retail sales report will likely give an estimate of how consumer spending fared during the month.

Bank of England to Remain on the Sidelines

The Bank of England will be holding its monetary policy meeting this week. But economists say that there will no changes from the policymakers. The UK’s central bank has left rates unchanged while waiting for the Brexit cloud to dissipate.

However, recent developments have pushed the UK’s Brexit deadline to January 2020. Meanwhile, the call for snap elections in early December will mean that the BoE will have to wait a bit more.

But the central bank is in no rush to change its monetary policy. Recent inflation reports have shown that consumer prices were retreating. This gives room for the BoE officials to wait and bide more time.

At the same time, the UK economy is somewhat slowing. It will be interesting to hear what officials think about the economy and its thoughts on forward guidance.

Christine Lagarde’s First Speech as ECB President

The week starts off for the eurozone with an opening speech by the new ECB President Lagarde. Formerly the head of the International Monetary Fund (IMF), investors will be keen to hear her speak.

There are mixed opinions on Draghi’s stimulus program and negative interest rates. Thus, investors will be looking to see if Lagarde will continue on with his policies.

Elsewhere, the economic data from the eurozone will cover industrial production from Germany. The numbers will be key given that the eurozone economy bucked the trend and came up with reasonably growth figures.

IHS Markit will be releasing the monthly services and manufacturing PMI figures for October.