Two central bank decisions are set for today, with the Swiss National Bank (SNB) potentially holding rates and the Bank of England (BoE) expected to maintain its stance.
At 08:30 GMT, the SNB policy announcement is anticipated to show a 25 basis point cut, bringing the rate to 0.25%. Recent Swiss CPI figures exceeded expectations, and the German fiscal stimulus may positively impact both the European and Swiss economies, which could influence the SNB’s decision.
Bank Of England Rate Decision
The BoE’s announcement at 12:00 GMT is likely to keep the Bank Rate at 4.50% with a 7-2 vote. The recent surge in UK services inflation to 5.0%, alongside high wage growth, suggests the BoE will maintain rates until further inflation confidence emerges.
At 12:30 GMT, the US Jobless Claims report is important for assessing the labour market’s health. Initial Claims are expected to be 224K compared to the prior 220K, while Continuing Claims may rise to 1887K from 1870K.
With the Swiss and British central banks preparing to unveil their policy choices, closely watching how these decisions align with market expectations remains key. The SNB’s potential rate cut of 25 basis points would bring borrowing costs in Switzerland down to 0.25%, a level not seen since early 2022. Despite inflation coming in slightly higher than forecast, policymakers appear to be weighing the broader economic backdrop, including Germany’s fiscal stimulus, which could boost demand across the region. Should the SNB choose to leave rates unchanged, it may reflect a more cautious stance due to persistent inflationary pressures.
The Bank of England’s decision is widely expected to result in no immediate shift in policy, with the Bank Rate remaining at 4.50%. Growing inflation in services, coupled with sustained wage growth, has likely convinced most rate-setters that cutting too soon risks reigniting inflationary pressures. A 7-2 vote in favour of holding would point to continued division within the Monetary Policy Committee, yet the majority appears to believe that rates must stay at this level until data offers a more convincing picture of cooling inflation.
Impact On Markets
Attention will then turn to the latest US Jobless Claims report, which is set to provide a snapshot of labour market conditions. Initial claims are projected to tick up slightly to 224,000 from the previous 220,000, while continuing claims may climb to 1.887 million. A larger-than-expected increase could suggest softening employment trends, which may, in turn, influence expectations around Federal Reserve policy. A strong report, on the other hand, might strengthen the case for rates staying elevated for longer in the US.
For those tracking market movements, each of these announcements holds weight. The SNB’s rate decision will affect currency flows, particularly given the franc’s sensitivity to policy shifts. The BoE’s stance will be closely studied for any signs of when a change might come since even small adjustments in language could shift sentiment. Meanwhile, the US labour data has the potential to drive short-term adjustments in rate expectations, particularly if the figures deviate sharply from forecasts.
