MPC member David Miles stated that he almost voted yes to raising UK interest rates last week. He stated that there was a reasonable case for starting a gradual rate rise to avoid more rapid and impulsive rise in the future. Ian McCafferty voted for a rate rise but David Miles comment is an indication of the shifting balance. He chose to vote for a hold on rate rise as a result of the economic news that reduced the near term inflation profile such as low Oil prices and a weak Eurozone economy.
The European commission reports that Greece has reached a technical agreement with its creditors which now requires parliamentary approval. The Greek government is now looking to put an Euro 85 billion (£60 billion) three year agreement through parliament this week. The country need to reach a deal by the 20th of Aug when it has to pay Euros 3 billion to the European Central Bank. The parties involved in the deal agreement were the IMF, the ECB, and the European Stability Mechanism.
A new independent privatization fund, deregulation of the natural gas market in 2018, a review of Greek social welfare system with the aim of cutting expenditure, and how the non performing bank loans will be administered were also agreed. However an early retirement program and plans to gradually increase the pension age to 67 by 2022 were not confirmed by EU officials. Euro-zone finance ministers are to meet on Friday to discuss approval of the deal.
Fed chairman vice chairman Stanley Fischer stated that the fed faces a dilema in deciding when to raise interest rate with the US economy in full employment which warrants higher interest rates but very low inflation still a stumbling block. the Feds next rate decision is on Sept 16-17.
Second quarter non farm productivity bounces back coming out at 1.3% beating the estimated 1.6%. This suggests that inflation could pick up much faster that many economists are anticipating. The quarterly preliminary labour costs also beat estimates of 0%, coming out at 0.5%.
10:00- GBP: UK ILO Unemployment rate (July) expected to remain unchanged at 5.6%.