We expect Norges Bank (NB) to keep the sight deposit rate unchanged at 0.50% at today's meeting and over the next 12 months. Economic data has on balance disappointed somewhat over the past months, but given the gradual improvement in activity, labour market status, higher foreign rates, the oil price rise and, not least, the housing market situation, we do not think NB sees a need to signal further monetary stimuli. Hence, we expect it to reiterate a 'neutral' bias (see more on page 2).
We expect the Bank of England to keep its monetary policy unchanged in line with consensus and market pricing. Focus is on the minutes, as it is one of the small meetings without an updated Inflation Report and a press conference. But we do not expect them to contain any big news, as economic data continues to be resilient to Brexit uncertainties.
The euro area PMI figures are due for release. Over the past three months, we have seen the manufacturing PMI rising but the leading indicators suggest a loss of momentum with a risk of a small decrease in the December figure due for release today. The signals for services PMI are more mixed and we expect the services PMI to remain broadly unchanged.
The US preliminary Markit PMI manufacturing index for December is also due to be released today. The index rose to 54.1 in November, the highest level since October 2015 and it seems as though the global manufacturing business cycle has turned, as global PMIs are increasing across regions and we expect this trend to continue, so we expect a slight increase in the Markit PMI manufacturing index.
US CPI figures for November will also be in focus. CPI core inflation has been more or less flat in 2016, suggesting that the economy still has room to run. We estimate the core CPI inflation rate was unchanged at 2.2% y/y while headline inflation should have increased to 1.7% y/y from 1.6% y/y in October, due mainly to the base effects of energy prices.
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