Market overview: MPC to keep QE steady this year, Barclays says



LONDON (ShareCast) - 1126: For Barclays Research today's monetary policy committee (MPC (KOSDAQ: 050540.KQ - news) ) minutes confirm their view that the redrafted MPC remit included in the March budget does not give the committee greater leeway to focus on stimulating the economy. In that same vein, they point out that should activity stabilise, afterwards returning to growth while inflation stays high, then a majority of the MPC will not vote to increase quantitative easing (QE). "However, they believe that it would take relatively little bad news on demand to propel the committee into a further QE push," they say.

1000: As expected, and per the minutes of the Monetary Policy Committee's (MPC) last meeting just out, policymakers voted unanimously to maintain the Bank Rate unchanged at 0.5 per cent. The decision to maintain the stock of asset purchases steady at 375bn pounds was also as foreseen, with 6 members of the MPC voting in favour and 3 against. FTSE 100 (FTSE: ^FTSE - news) down 31 to 6,274.

0942: To no one's surprise, Sweden's central bank - the Riksbank (RB) - left policy rates unchanged this morning, at 1.0 per cent. However, the RB has also revised its path beyond the July meeting significantly lower, with policy rates now expected to be 0.94 per cent by year-end 2013 (previously 1.14 per cent) and 1.40 per cent year-end 2014 (previously 1.9 per cent), analysts at Barclays Research point out.

0930: At first glance today's employment report has come in mixed. The unemployment rate for the three months to February has come in a tenth of a percentage point higher than was expected, at 7.9 per cent. The claimant count did fall in March by 7,000 people (Consensus: 0.0). Nevertheless, average weekly earnings grew by just 1.0 per cent versus last year, well below the 1.4 per cent rise expected and came in at their lowest since 2001.

0835: UK stocks are registering slight gains at the open, led by Burberry and Hargreaves Lansdown (LSE: HL.L - news) . That comes ahead of the release, later in the morning, of the minutes of the Bank of England´s next policy meeting. For Barclays Research the question is whether the MPC sees its ammended remit simply as a tidying up of the previous remit, which is their interpretation, or whether it has more material implications for the policy outlook. The latest labour market statistics are also published at 09:30. Both the ILO unemployment rate and claimant count are seen unchanged. FTSE 100 up 14 to 6,320.