Britain Poised for Double Dose of Virus-Related Easing: Eco Week

Britain may receive a double whammy of coronavirus-related easing this week as the government loosens some restrictions on businesses and the Bank of England prepares more stimulus.

The country with Europe’s highest death toll, and corresponding criticism of its public health response, will allow most stores to reopen on Monday as it tries to breathe life into an economy that shrank more than 20% in April. Meanwhile BOE officials may do their own part to aid the recovery, with analysts predicting a further increase in its bond-purchase plan on Thursday.

Fresh from a report showing the economy effectively lost 18 years worth of growth in two months, the nation will also this week see reports on unemployment, inflation, retail sales and house prices.

What Bloomberg’s Economists Say…

“We expect a unanimous decision from the Monetary Policy Committee to keep its policy rate at 0.1% and to increase the asset purchase target by 100 billion pounds to 745 billion pounds. The risks are tilted toward a larger increase that would allow the central bank to continue purchases until November, at which point it can take stock.”

–Dan Hanson, senior U.K. economist. Click here for full preview.

Elsewhere, U.S. Federal Reserve Chairman Jerome Powell is due to testify before lawmakers, and central banks in Japan, Russia and Brazil hold rate decisions.

Click here for what happened last week and below is our wrap of what else is coming up in the world economy.

Asia

A raft of Chinese data on industrial production, retail sales, investment and jobs will be scrutinized on Monday to gauge whether the world’s second largest economy’s slow recovery from its virus lows is gathering pace. The Bank of Japan is expected to largely sit tight Tuesday after unleashing a raft of measures to help struggling firms at recent meetings.

Indonesia and Taiwan’s central banks meet Thursday. The same day, Australia releases jobs data for May after almost 600,000 positions were lost amid virus lockdowns in April.

  • For more, read Bloomberg Economics’ full Week Ahead for Asia

U.S.

Fed Chairman Powell will testify over two days of hearings before Congress in the central bank’s semiannual monetary policy report to lawmakers in the House of Representatives and Senate. Investors will be listening for any more indication of Powell’s view on the economy and for updates on the Fed’s lending programs. Economic data to watch for this week include U.S. retail sales on Tuesday and the latest jobless claims on Thursday.

  • For more, read Bloomberg Economics’ full Week Ahead for the U.S.

Europe, Middle East and Africa

Central banks across Europe hold monetary policy meeting this week, with Poland, Switzerland and Norway expected to keep rates at record lows, while Russia — which decides on Friday — is predicted to cut its benchmark by at least 75 basis points to get the economy going as fears about the ruble and inflation fade.

Namibia’s new central bank governor Johannes Gawaxab will likely reduce rates at his first MPC meeting on Wednesday to help preserve the Namibian dollar’s peg to the rand following a similar move by his South African counterpart last month. Mozambique’s MPC could also lower its rate further, while Botswana might stay on hold after inflation started picking up in April.

  • For more, read Bloomberg Economics’ full Week Ahead for EMEA

Latin America

Brazil, Latin America’s biggest economy, is in the grip of deflation, the deepest recession in decades and a particularly bad outbreak of the pandemic. On Wednesday, the country’s central bank will all but certainly cut its key rate for an eighth straight meeting, with analysts expecting a 75 basis-point reduction to a record-low 2.25%. The day before, Brazil’s April retail sales results should line up with the double-digit decline in industrial output for the same month reported out on June 3.

Chile’s central bank on Tuesday is expected to pause for a second month at 0.5% — what policy makers call the “technical minimum,” or effective lower bound. The central bank is already buying back bank bonds on the secondary market but isn’t expected to expand the program just yet.

  • For more, read Bloomberg Economics’ full Week Ahead for Latin

— With assistance by Malcolm Scott, Peggy Collins, Rene Vollgraaff, Robert Jameson, and Gregory White

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