British economic growth slowed to 0.4 percent at the start of the year, a preliminary release showed as expected on Wednesday, but the real picture may well be better.
Wednesday’s British pay data showing wages rose only 1.9 percent in the fourth quarter could well be the straw that broke the camel’s back for anyone still expecting the Bank of England to raise interest rates anytime soon.
Financial markets and borrowers rooting for the Reserve Bank of India to ease policy this year could be in for a disappointment – in stark contrast to 2015 when it lopped 125 basis points off the repo rate.
Forecasts for when the Bank of England will raise rates have been put off into the future for the seventh time since Mark Carney became Bank of England Governor nearly three years ago.
The Reserve Bank of India is widely expected to cut interest rates just once in 2016, as most analysts see retail inflation rising slightly above the central bank’s target, but there is a decent chance it could cut more aggressively, as it did last year.
After Bank of England policymakers once again voted 8-1 in favour of keeping British interest rates on hold at a record low, UniCredit just got on board with a carriage full of other major banks and pushed back its call for when the initial rate rise would come.
The world economy may be set for another year like 2015, with modest growth in developed economies offsetting persistent weakness elsewhere but generating very little inflation and keeping interest rates low.
Another month, another round of disappointing British trade data.
The U.S. November jobs report is expected shortly, and in all likelihood it will be a solid one. But forecasts around future employment are not quite so optimistic.
The Federal Reserve’s planned smooth and gradual rate hike path may be bumpier than anticipated if U.S. economic growth over the next several months and punishingly cold winter weather follow a well-established recent pattern.