Bank of England Follows Fed With Rate Freeze

Bank of England Follows Fed With Rate Freeze By Hardika Singh

The Bank of England on Thursday followed the Federal Reserve in keeping interest rates unchanged but signaled that it could join some of its European peers in cutting rates soon. Meanwhile, with summer in the U.S. off to a sizzling start, this means higher electricity bills are on their way. And regional American banks are paying asset managers to share the risk on billions of dollars of loans. Read on for this news and more.

Top News Bank of England Holds Off on Rate Cut Despite Easing Inflation

The Bank of England left its key interest rate at a 16-year high Thursday, but signaled it may follow a growing number of its European peers by lowering borrowing costs over the coming months. The U.K.'s central bank held its key rate at 5.25% for the seventh straight meeting, in line with what investors and economists had expected.

Singh's Take: Why Slowing Consumer Spending Could Be Good News for the Fed By Hardika Singh

U.S. consumers are cooling their spending. That might be just what the Federal Reserve is looking for.

Fresh economic data released earlier this week showed that retail sales data for May rose from the month before but came in lower than expectations. At the same time, April data was revised downward, signaling that consumers might be finally starting to feel pressure from a tighter economic environment. Read more .

U.S. Economy How a College Dropout Changed What We Know About the Economy

MIT economist David Autor is helping shape the U.S. response to the biggest economic issues from the China Shock to job hunting after the pandemic

Financial Regulation Regional Banks Want to Slim Down. Hedge Funds Smell a Bargain.

Regional banks around the U.S. are striking complex and costly bargains with hedge funds, hoping to insulate themselves from a replay of the turmoil that followed Silicon Valley Bank's failure last year. The deal is known on Wall Street as a synthetic risk transfer , and it offers cash-flush, private-debt fund managers-such as Ares Management and Blackstone-an attractive investment.

Forward Guidance Wednesday (all times ET)

10 a.m.: Home builder confidence index

Thursday

7 a.m.: U.K. interest rate decision

8:30 a.m.: Philadelphia Fed Business Outlook Survey

8:30 a.m.: Housing starts and building permits

8:30 a.m.: Initial claims

4 p.m.: Federal Reserve Bank of Richmond President Thomas Barkin speaks before the Risk Management Association

Research German Economic Sentiment Shrugs off Political Uncertainty

Increased political risks from European parliamentary elections and the announcement of a snap vote in France had little discernible impact on German financial market participants in the latest ZEW survey, HSBC economist Stefan Schilbe says in a note. That means the eleventh-straight improvement in the index should be taken positively, even acknowledging that consensus expectations were for a larger improvement, he says. The European Central Bank's interest-rate cut on June 6 likely helped support sentiment, with four in five respondents to the survey expecting a further cut in the next six months, he notes. Although the survey's component for current economic conditions in Germany remains unusually bleak, unless political uncertainties intensify, Germany should embark on a gradual economic recovery over the coming months, Schilbe adds. - Edward Frankl

Basis Points Switzerland's central bank on Thursday cut its key interest rate for the second straight meeting , a move that underlined the divergence between European policy makers and their counterparts at the Federal Reserve as their efforts to tame inflation enter what they hope will be the final stretch. - Paul Hannon Norway's central bank held its key policy rate at 4.5% and reiterated guidance that the rate is likely to stay at that level for some time, as high wage growth is expected to keep inflation elevated. The central bank said it is unlikely to cut its key rate this year . - Paul Hannon The European Commission on Wednesday recommended disciplinary procedures against France for running an excessively large budget deficit , a blow for the government as it faces fresh elections. Its budget deficit last year rose to 5.5% of gross domestic product from 4.8% in 2022, according to the EU's statistics agency. - Paul Hannon The far right's acceptance of the euro means that possible victory in France's election is unlikely to lead to a financial crisis . As Europe's far-right parties have crept closer to power, their stated goals have shifted from leaving the EU to reforming it from within. The underappreciated story of Europe's election season isn't the fragility of the EU and euro, but their resilience. - Greg Ip Summer is off to a sizzling start in the U.S., which means higher electricity bills are on their way . The Energy Information Administration expects the U.S. average monthly residential power bill to rise to $173 in June, July and August, up 3% from last summer. - Ryan Dezember Brazil's central bank paused its easing cycle Wednesday as inflation remains above target. The bank kept its Selic benchmark interest rate at 10.5% following seven consecutive cuts since August, when the policy rate was 13.75%. The bank's monetary policy committee said "monetary policy should continue being contractionary" in order to drive inflation and inflation expectations down to target. - Paulo Trevisani Bank of Canada policymakers considered keeping their main interest rate unchanged in June and wait for two months of inflation data, but in the end agreed the consumer-price index was on a sustainable path toward their 2% target, according to a summary of their deliberations leading up to a June rate cut. - Paul Vieira China's benchmark lending rates were kept unchanged, as expected by the market after the central bank held its policy rates steady earlier this month. The one-year loan prime rate was kept steady at 3.45% and the five-year rate was maintained at 3.95%, according to data released by the People's Bank of China on Thursday. - Singapore Editors A speech by China's central bank chief signals that it is looking to update its monetary tool kit with potential changes that economists say herald a major policy revamp, bringing it closer to practices adopted by its western peers. - Singapore Editors Trading in bonds by China's central bank wouldn't be a form of massive monetary easing , according to its governor, as he responded to speculation that Beijing is eyeing the unconventional policy tool to prop up the economy. - Singapore Editors China's securities regulator plans to step up oversight on companies listed on the Star Market , the country's Nasdaq-style tech board, as part of reform measures to contain market volatility. The regulator said it will prioritize supporting companies with innovative and cutting-edge technologies in listing on the board. - Jiahui Huang Indonesia's central bank stood pat at its June policy meeting as expected, aiming to keep inflation in check as well as to maintain the rupiah's stability. Bank Indonesia on Thursday kept its benchmark seven-day reverse repo rate at 6.25%. - Ying Xian Wong Not many stock markets can hold a candle to the red-hot Nasdaq. India is an exception. Strong profit growth, geopolitical tailwinds and favorable demographics have presented a compelling investment case for the country. - Jacky Wong New Zealand's farm-rich economy returned to growth in the first quarter , exiting the recession that has dogged it for much of last year, but further weakness can't be ruled out. The economy grew 0.2% in the first quarter from the prior quarter, and by 0.3% compared with the same period a year earlier, Stats NZ reported on Thursday. - Rthvika Suvarna About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [[e-mail]].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

06-20-24 0725ET