EU inflation confirmed at 1.0%, while headline inflation down to 1.3%, followed by an unexpected slope in UK inflation

Apr 19 • Morning Roll Call • 1102 Views • Comments Off on EU inflation confirmed at 1.0%, while headline inflation down to 1.3%, followed by an unexpected slope in UK inflation

The Eurozone inflation came out yesterday, and it rose less than expected in March, making it a difficult task for ECB to bring the inflation to close to 2% target. In 2017, the inflation rate was 1.5%, while in February 2018 it was 1.1% and according to the latest reading, 1.3% in March 2018.

Regarding the UK, core inflation has managed to disappoint market expectations and came below the expectations, with core CPI at 2.3%. According to James Smith, Developed Markets Economist at ING, the core inflation is falling due to the prices being virtually adjusted to the post-Brexit drop in the pound. This may take some pressure of the BoE to tighten the policy over coming months, however May rate hike looks eminent. As the economy is still trying to come to the right track, policymakers have been mentioning the possibility of another rate hike in November this year.

Coming from the States, President Trump has tweeted once again, this time regarding the TTP deal, stating he does not like the conditions it brings for the US, as it has too many contingencies and prefers bilateral deals. As a reminder, the original TTP agreement was a signature trade policy drafted under the previous US President, Barak Obama, nevertheless he did not manage to secure the support from the Congress. Current US President has withdrawn the deal with an aim to protect the US jobs and has been mentioning an intention to join the now CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) but with better deals for the US. Deal or no-deal is yet to be seen.
For today, we have the initial jobless claims from the US, which have remained close to historical lows for some time now and are expected to stay low. In addition, Philly Fed survey will be out and it is expected that the headline index would fall slightly to 21.5 in April as opposed to 22.3 in March.

From Europe, the UK retail sales will be released with forecasted number lower that previous, looking at -0.5% as opposed to 0.8% in March.

ECONOMIC CALENDAR EVENTS FOR APRIL 19th

EUR Current Account
GBP Retail Sales m/m
GBP MPC Member Cunliffe Speaks
USD FOMC Member Brainard Speaks
USD Philly Fed Manufacturing Index
USD Unemployment Claims
USD FOMC Member Quarles Speaks

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