The Week Ahead: (Dis)United Kingdom?
The UK General Election may be over but the hard work is only just beginning. The Conservative Party doesn’t have an overall majority in the House of Commons. But it has formed a loose alliance with the Democratic Unionist Party which will ensure that Theresa May can continue as Prime Minister. But will that be enough for May’s hard-line stance at Brexit negotiations?
The Bank of England is pencilled in for an interest-rate decision. What can possibly be going through the mind of the bank governor, Mark Carney? It’s probably unprintable on a family-friendly website like ours. Will the bank be forced to step in to stem the fall in sterling or will it allow the pound to find its own level, even if it could be significantly lower?
The US Federal Reserve is likely to increase interest rates at its meeting next week. It left the federal fund rate unchanged at between 0.75% to 1% in May. But it could raise it by 0.25% next week.
Its decision could hinge to some degree on the inflation numbers that are due next week. In April, the headline inflation rate increased to 2.2%. Core inflation, which can be a more reliable gauge of the cost of living, was 1.9%.
The Bank of Japan has an interest-rate decision to make also. The central bank has raised its forecast for economic growth from 1.5% to 1.6%. Could that be a sign that the BoJ governor, Haruhiko Kuroda, could be preparing the market for a tightening of monetary policy?
There is also an interest rate decision in Indonesia, where the central bank is likely to stand pat on the cost of borrowing. Meanwhile, Malaysia will report retail sales figures for April, where shopkeepers have been enjoying their day in the sun.
China will report its closely-watched retail sales figures. In April they rose 10.7% from a year ago. That was marginally lower than the previous month as sales of cars, building materials and home appliances grew more slowly. But there was a rise in sales of garments, personal care and jewellery.
And finally, Singapore will report retail sales for April. In March, they unexpectedly rose 2.1% driven by demand for watches, optical goods and books. But it was less good for food and beverage operators. That might explain why I could get a table at a hawker centre without “choping”.