Steen Jakobsen
The Bank of Japan has abandoned quantitative easing and the European Central Bank may taper its bond-buying programme, so what is the role of central banks in 2017, asks Saxo Bank’s chief economist Steen Jakobsen.
Article / 04 August 2016 at 8:00 GMT

Letter from Paris: 'The only central bank meeting that counts'

Editor / Saxo Bank
  • BoE outing central to August policy landscape
  • Poor PMI data signal risk of UK recession
  • September to feature over 30 central bank meetings

By Michael McKenna

Calling today's Bank of England outing "the only central bank meeting that counts this month," Saxo Banque reports that it sees expectations of a 25 basis point rate cut as credible given the data available to the bank.

Among the main precursors to today's forecasted cut were the PMI data released yesterday, which showed the services sector reading decline from 52.3 in June to 47.4 in July; the lined construction PMI release slid from 46 in June to 45. last month.

"The data confirm that there is a high risk of a 2009-like recession in the UK," reports Saxo Banque from Paris, adding that "some action is needed to reassure investors."

While the consensus expectations of a hike are strong, and likely already priced into the major GBP pairs, any surprise – or even no surprise at all, but merely confirmation of the market's data-driven fears – could see a major move in sterling.

Yesterday, Saxo technical analyst Kim Cramer Larsson said that he could see extremes of 1.28 to 1.3650 depending on the BoE's statement.

"While there has been no credit tightening or market panic," says Saxo Banque, "a BoE rate cut is only a matter of time."

After today's outing, concludes Saxo Bank's French headquarters, the remainder of August will likely be fairly quiet on the policy front, as the month is largely free of major central bank releases after today.

In September, however, over 30 central bank meetings will give birdwatchers all of the opportunities for hawk and dove (probably more of these) viewing that one could ever desire.

Hawks over the Fed?
Perhaps over Washington? Photo: iStock

Michael McKenna is an editor at


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail