Central bankers in London and Jakarta will probably conclude this week that inflation poses little threat as they choose to keep borrowing costs unchanged.
In the U.S., data at week’s end will probably show a pickup in consumer sentiment in April as the economy emerges from a weather-related slowdown. Figures on U.K. industrial production are forecast to show further progress in manufacturing, and Australia’s jobless rate is projected to rise to an 11-year high. Inflation in Brazil probably picked up.
-- It’s no change again at the Bank of England this week. All economists in a Bloomberg survey predict the Monetary Policy Committee will keep its key interest rate at a record-low 0.5 percent, in line with its guidance to maintain policy at least until unemployment, now at 7.2 percent, drops to 7 percent and some of the slack in the economy has reduced. U.K. inflation held below the BOE’s 2 percent target for a second month in February, further easing pressure on central bankers to tighten policy as the economic recovery gains traction. Officials have shortened their normal two-day meeting to a single day, on April 9, to allow some MPC members time to travel to International Monetary Fund meetings in Washington. The BOE will still announce its decision at noon in London on April 10.
-- The meeting change “does not exactly suggest an agenda brimming with contentious debate,” Philip Shaw, an economist at Investec Securities in London, said in a research note. “With the economy growing respectably but not roaring away, we see it likelier than not that the MPC will avoid tightening policy this year, especially with CPI inflation expected to remain below target over the medium term.”
-- U.K. industrial production probably rose for a third month in February, according to a survey of economists before an April 8 report. The median forecast calls for a 0.3 percent increase from January. The figure and April 11 data on construction are the last major output indicators before the Office for National Statistics publishes its estimate of first-quarter gross domestic product at the end of the month. The National Institute of Economic and Social Research will publish its own GDP estimate after the production report.
-- “The smog enveloping the country this week is an apt metaphor for much of the U.K. economic data, but the industry and construction data for February should bring some additional clarity,” said Ross Walker, an economist at Royal Bank of Scotland Group Plc in London. “We expect steady, if unspectacular, industrial growth. Greater uncertainty surrounds the construction data,” though the sector “should remain on course to achieve solid growth.”
-- The Thomson Reuters/University of Michigan’s preliminary index of consumer sentiment rose to 81.5 in April from 80, the lowest level in four months, economists project the figures to show on April 11. The rebound comes against a backdrop of further job gains in March and the strongest sales month for automakers since 2007.
-- “We view the relative stability of confidence measures as a sign that the weak activity data in recent months was weather-related and not fundamental,” Peter D’Antonio, a Citigroup Inc. economist, said in weekly research note. “The March surge in auto sales confirms this view, suggesting that the spate of poor economic data is coming to an end.”
-- Indonesia’s central bank will keep its benchmark interest rate unchanged for a fifth straight meeting as the currency strengthens and inflation remains contained, a Bloomberg survey of economists showed ahead of an April 8 decision.
-- Even so Glenn Maguire, chief economist for the Asia-Pacific at Australia & New Zealand Banking Group Ltd. in Singapore, said in a research report that he expects Bank Indonesia to tighten eventually. “Our confidence that inflation and the current-account deficit will remain well-behaved is waning, hence our revised forecast for an extension to the BI tightening cycle,” Maguire said in a research report.
-- Australia’s jobless rate climbed to 6.1 percent in March, the highest in almost 11 years, economists forecast data to show on April 10. Reserve Bank of Australia Governor Glenn Stevens has warned unemployment will probably rise a bit further. In a statement on April 3, Boeing Co., the world’s largest planemaker, announced it will cut about 300 jobs at its Australian unit. A day earlier, BP Plc and Philip Morris International Inc. announced more than 500 in combined job cuts and plant closures.
-- “The RBA is typically reluctant to lift rates while unemployment is trending higher,” John Peters, a senior economist at Commonwealth Bank of Australia in Sydney, said in a research report. The next meeting is May 6. “It typically takes a peak in unemployment and subsequent shift lower to give the green light for the RBA to start shifting away from stimulatory policy settings.” The key interest rate currently stands at a record-low 2.5 percent.
-- Brazil’s statistics institute on April 9 probably will report that inflation accelerated for a second straight month in March, as prices rose 0.85 percent to push the annual rate to 6.08 percent. The central bank has raised borrowing costs at its last nine meetings, to 11 percent, in a bid to get consumer prices back toward the mid-point of their 2.5 percent to 6.5 percent target range.
-- Accelerating inflation will force the central bank to continue raising interest rates, said Luciano Rostagno, chief economist at Banco Mizuho do Brasil SA in Sao Paulo. “We’re seeing a very high chance that inflation will break the upper limit of the central bank’s target throughout the year. It has to keep increasing rates to reduce inflation inertia and enable it to move down after shocks fade.”