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It was Central Banks Day today and there are several drivers for the markets.
The Bank of England announced its monetary policy decision on Thursday and raised the benchmark interest rate by 25bps to 0.50%.
The Monetary Policy Committee (MPC) voted 5-4 in favor of a 25 bps rate hike. The decision was in line with market expectations and marked the first back-to-back rises since 2004. The BoE MPC voted unanimously to reduce corporate bond holdings through non-reinvestment and active sales, reaching zero holdings no earlier than towards the end of 2023
The European Central Bank opted to leave its deposit rate unchanged at -0.5% on Thursday as unanimously expected. The bank maintained its guidance on interest rates, saying they would remain at present or lower levels until the conditions for a rate hike have been met.
The bank also reaffirmed its QE policy guidance from December; that the PEPP will end in March, that in Q2 the APP will be lifted to EUR 40B per month, then tapered back to EUR 20B per month by Q4, while PEPP reinvestments will continue to the end of 2024. The bank also reaffirmed its guidance that QE purchase would end prior to any increases to interest rates.
There were 238,000 initial claims for unemployment benefits in the US during the week ending January 29.
This reading followed last week’s print of 261,000 and was below with consensus market expectations for 245,000. Continued Claims fell slightly less than expected to 1.628M in the week ending on January 22 from 1.672M the week prior (revised lower from 1.675M) and was slightly above the 1.62M expected. The insured unemployment rate remained unchanged at 1.2%.
