As expected, the ECB yesterday kept it’s main interest rate on hold at zero for another month. It also confirmed that the bond-buying stimulus scheme will remain unchanged, with the Bank continuing to buy EUR 60 Billion worth of bonds each month until the end of 2017 and possibly beyond.
While confirming that the general outlook has improved, helped along by higher consumer spending, wage growth and a global economic rebound; ECB head Draghi highlighted that inflationary pressures remain subdued. The main contributor to rising prices earlier this year was higher energy prices, however inflation has slipped below the ECB’s target since then.
When asked, Draghi insisted that the French election had no bearing on the bank's decision and that the subdued inflation outlook remained the main driver of policy. "We actually don't do monetary policy based on likely election outcomes," Draghi said at a press briefing following the decision. "We have not seen sufficient evidence to alter our inflation outlook."
According to the latest monthly Confederation of British Industry survey, retail sales growth accelerated in the year to April, with the volume of sales growing at the fastest pace since September 2015. This positive figure contrasted with official data that had showed retail sales posted their biggest quarterly fall in seven years in the first quarter of 2017, and reinforced views that household spending is now slowing sharply.
09:30 – GBP : Prelim GDP q/q, expected at 0.4% against a previous of 0.6%
13:30 – USD : Advance GDP q/q, expected at 1.3% against a previous of 2.1%