21 Nov 2019

FOMC minutes

The minutes to the October 29th Federal Reserve meeting released yesterday evening suggest that the FOMC will be in no hurry to cut rates further following their decision to cut rates by 25bps at the meeting. 

The October cut was the third cut in a series which began in July, bringing the upper bound of the Target rate from 2.5% to 1.75%. The decision to cut in October was not unanimous, with two members, Esther George and Eric Rosengren voting against the cut on the basis that policy was already sufficiently accommodative particularly with the currently tight labour markets. 


After a flurry of activity in major central banks which saw the Fed cut 3 times and the ECB cut rates even further into negative territory, we now seem to be entering into a period where rate action from the two major central banks is unlikely. Markets currently don’t expect any activity on rates from the Fed until at least Q2 2020, with no ECB rate activity at all forecast in 2020.


UK politics - party manifestos


Yesterday, we saw the release of the Liberal Democrat manifesto where, unsurprisingly, they promised to scrap Brexit and use the “remain bonus” to boost spending. This came alongside pledges to tackle climate change, generating 80 per cent of the UK’s electricity from renewable energy by 2030. 


Today it is the turn of Labour with the launch event at 10am in Birmingham. A huge step up in public spending is set to be unveiled alongside tax hikes on corporations and higher earners. The launch is also set to include a £75bn pledge to build 150,000 new council and social homes a year by 2024. The Conservative Party manifesto is expected in the next three days. 


One plank of this was given away yesterday, as PM Johnson spoke of his plans to raise National Insurance Contribution thresholds over time (to £9500 next year, and then to £12500 at a currently undetermined later date) whilst we know already that plans to lower corporation tax from 19% to 17% next year, have been postponed. Another key plank will be a “three-point” plan to deal with the social care crisis. As a reminder, we published our full General Election preview yesterday.


Economic Releases


09.30 UK  PSNB

10.00 UK  Labour party manifesto launch

12.30 EC  ECB meeting minutes

14.30 SA  SARB announcement