The market awaits ECB rate unchanged, BOE 50 BPS cut.

[RTFX-Trading]

Neither the ECB nor the BOE are likely to surprise the market with their decisions. However, in both cases, we should learn something.

Following ECB last meeting, Trichet made it clear that a rate cut at today's meeting is unlikely. Recent data emphasize the economy in the euro area has collapsed, the forecasts for this year are pessimistic: the real GDP to -2.0% (against -1.6%) and inflation forecasts alarmist. The interest rates in the euro area should be around 1%. However, Jean-Claude Trichet did not intend, in his recent statements, to lower interest rates. The market expected rates unchanged at 2% to 13.00 CET, while the tone of the conference at 14:30 CET will be particularly interesting in order to be able to identify the ECB future policy.

In England, the Monetary Policy Committee (MPC) is expected to announce a 50 basis points cut to 1,5%. Since the last meeting in January, the activity indicators show us falling inflation, while the decline of the pound sterling was halted, Given the state of financial markets, it seems unlikely that the bank of England surprised the market. In fact, the UK economy weakness suggests that, even if rate is reduced to zero, inflation should remain very low. This opens the door for the British authorities of a zero interest rate policy. The BOE should cut its rate by 50 basis points to 13.00 CET, the statement that will follow the announcement will be interested. The inflation report next week will give us an opportunity for clarification.