Central banks wait

The BoJ waits

The Daily Mail reports how a Lincolnshire couple spent "just" £2k on their wedding. Going by the photos of frilly frocks and fancy food it looks like clever budget management. But the article seems to assume that anything less than £10k amounts to parsimony and that more is better.

That was the view of investors this morning when the Bank of Japan issued its monetary policy announcement. They clearly thought that more stimulus from the BoJ would have been better for equities and the economy. When no such stimulus was announced they took the only reasonable course of action and bought the yen, sending it to an almost two-year high against the US dollar and a three-year high against sterling. 

The Wall Street Journal says that one reason the BoJ did not act this week to print more money and weaken the yen was next Thursday's referendum. Some board members "were concerned that even if the BOJ acted this week, the market impact of its move would fade if a "Brexit" vote rocked global financial markets".

The Fed waits

To no one's surprise, the Federal Open Market Committee decided yesterday to keep its target range for the Federal Funds rate at 0.25%-0.5%. Chairperson Janet Yellen was careful not to rule out a rate hike at the end of next month but investors will not be holding their breath.

The dovish tone of the Fed's statement implied less pressure from within the FOMC to raise rates. Ms Yellen also cited the referendum as one of the considerations in the decision, on the basis that it "could have consequences for economic and financial conditions in global financial markets" and "If it does so it could have consequences in turn for the US economic outlook that would be a factor in deciding on the appropriate path of policy."

Beating only the Canadian dollar the Greenback was the day's second weakest performer. It lost two yen and was down by a third of a cent against sterling and by one and half cents against the euro.

Europe waits

There are two more central bank decisions today, neither of them likely to result in a change to current policy. There are inflation data from Euroland and the United States and retail sales figure from Britain. And the chancellor and the Bank of England governor will be speaking tonight.  

The Swiss National Bank is expected to keep its benchmark interest rate target at -0.75% and the Bank of England has no alternative but to leave Bank Rate at 0.5%. UK retail sales should have increased in May while inflation is forecast to be steady in the €Z and the US at -0.1% and 1.1% respectively.

This evening George Osborne will deliver his annual "Mansion House Speech" at the Lord Mayor's Banquet. Mark Carney will also address the gathering. Mr Carney will be talking about blockchain currencies: Mr Osborne will probably be unable to avoid talking about Brexit.