Bank of England's Policy Meeting: Anticipated Rate Hike in Response to High UK Inflation"
European stock markets are anticipated to open slightly higher on Wednesday as investors adopt a cautious approach, awaiting the release of important U.S. inflation data alongside ongoing earnings announcements. In Germany, the DAX futures contract traded 0.1% higher, while in France, the CAC 40 futures climbed 0.1%, and the FTSE 100 futures contract in the U.K. rose 0.1%.
The headline Consumer Price Index (CPI) for April revealed a slightly cooler than expected year-on-year (Y/Y) figure of 4.9%, marking the first time it fell below 5% since April 2021. The anticipated unchanged pace of 5.0% was not met. The month-on-month (M/M) reading increased by 0.4%, aligning with expectations and accelerating from the 0.1% recorded in March. The core metrics matched expectations, with the Y/Y figure at 5.5%, down from 5.6%, and the M/M figure rising by 0.4%, matching the previous pace.
In the U.S., the market focus will be on the Producer Price Index (PPI), jobless claims data, and speeches by FOMC members Neel Kashkari and Chris Waller.
Mainland China shares and Hong Kong's Hang Seng Index experienced declines after Beijing reported slower-than-expected consumer inflation, while producer prices continued to decline. Chinese bonds rallied due to easing expectations. Japanese shares fell due to a stronger yen, and Australian stocks also declined.In Europe, the Bank of England is scheduled to hold its latest policy-setting meeting later in the session. Policymakers are expected to authorize a 12th consecutive rate hike, given that U.K. inflation remains in double digits, the highest among major economies.
During the G7 finance ministers' three-day meeting in Niigata, Japan, U.S. Treasury Secretary Janet Yellen emphasized three core priorities: addressing global inflation, strengthening long-term economic resilience, and reaffirming commitment to Ukraine. Additionally, there is a strong desirto hear from Yellen about the United States' ability to resolve its own debt ceiling dilemma and prevent a potentially catastrophic default.
