BoE Interest Rate Decision And US NFP Report In Spotlight
The Bank of England (BoE) interest rate decision and the US Nonfarm Payrolls (NFP) report will be the two data releases to draw attention for the remainder of the week. Market participants still discuss Donald Trump’s tariff plans although the Canada and Mexico cases are on pause for the next thirty days.
Stock markets shook off tariff fears with South Korea’s Kospi and Japan’s Nikkei 225 indices rising on Wednesday. In other news, Alphabet’s fourth-quarter results missed revenue expectations, forcing the company’s share value to drop. Another report revealed that the fourth-quarter data center sales of Advanced Micro Devices (AMD) missed estimates while net income fell significantly.
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Bank Of England Interest Rate Decision
On Thursday morning, the Bank of England’s Monetary Policy Committee (MPC) will convene to decide on interest rates. Economists suggest that the MPC will cut rates by 25 basis points, leading the benchmark interest rate to 4.50%.
A series of reports coming from the UK showed that the economy was still under pressure with retail sales and services inflation dropping. Weak figures could force the BoE to loosen its monetary policy with market analysts forecasting a total of 100 basis points rate cuts during this year.
Economists at ING noted in a report that “expect its policy statement to simply reiterate that further gradual easing is likely, without any comments about timing. Four rate cuts this year feel like the Bank’s base case, and that's our thinking too. But don’t ignore the risk of more aggressive easing later this year. Markets have a tendency of lumping the BoE in the same category as the Fed, despite the macro story looking increasingly different in the UK.”
US Nonfarm Payrolls January 2025 Report
On Friday, the US Bureau of Labour Statistics (BLS) will publish January’s nonfarm payrolls report. The report plays a role in how the US Federal Reserve (Fed) adjusts its monetary policy.
Market analysts expect the NFP figure to come in at 170,000, significantly lower than December’s 230,000 number. However, it should be noted that December’s figure exceeded analysts’ expectations. The US unemployment rate is expected to remain unchanged at 4.1%.
The JOLTs report, released by the BLS on Tuesday, showed that the number of job openings in December was at the lowest level since September 2024. The figure for the latest JOLTs Job Openings came in at 7.6 million. This number fell short of the forecasted 8.0 million, marking a decline from November’s figure of 8.1 million.
Gold Hits Record High
Gold prices hit a record high on Wednesday morning, reaching $2,861.78 per ounce. Gold has now gained 9% this year, benefiting from concerns over the disruption tariffs could cause.
Commenting on gold prices, Deutsche Bank’s economists told The Guardian reporters that “there’s little doubt that markets remain pretty nervous about the whole situation, with tariff risk still being priced into several key assets, and gold prices hit an all-time high.”
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