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Will the US employment figures maintain their upward momentum?
The latest US monthly employment report is expected to build on June’s good results as the country’s economic recovery from the pandemic continues despite a resurgence of cases in recent weeks.
Economists polled by Bloomberg expect Friday’s non-farm payroll report for July to show 859,000 jobs created, up from 850,000 the month before and far more than the revised 583,000 added in May. The unemployment rate is expected to have fallen to 5.7 percent from 5.9 percent in June.
As states in the United States grapple with the surge in Covid cases due to the more contagious Delta variant, experts predict that the number of jobs will continue to rise in the months to come, filling most of the 9, 2 million record jobs posted in May, the latest figure available.
Last week, the Federal Reserve said it had made “progress” towards its goal of achieving full employment.
However, investors remain cautious of inflation, which is partly due to rising wages as employers struggle to fill positions. Average hourly wages rose 3.6 percent in June year on year.
Some cite the Biden administration’s $ 1.9 billion stimulus package, launched in March, for the reluctance of many to re-enter the workforce, thereby raising wages. But with the program set to end nationwide early next month, analysts believe wage pressures will ease.
“These enhanced benefits have already expired in a handful of states, and even in those places you continue to see wage growth. [But] at some point here the well finally dries up and people have to get back to work, ”said David Lebovitz, markets strategist at JPMorgan. Saharan Shubham
Will Bank of England bond buying divisions widen?
Soaring inflation and a strong economic recovery have opened up divisions within the Bank of England over how quickly it should end its stimulus efforts.
Chief Economist Andy Haldane voted in May to reduce the size of the current round of central bank bond purchases to £ 100bn from £ 150bn. Although Haldane has since left the central bank’s rate-setting committee, two other members – Michael Saunders and Deputy Governor Dave Ramsden – have since suggested that monetary policy should be tightened as soon as possible.
Other members of the committee appear to favor continued purchases until the end date set at the end of the year, under the leadership of Governor Andrew Bailey, who has warned of overreacting to temporarily high inflation .
Investors will therefore closely monitor voting trends at the last BoE meeting on Thursday.
Markets are “reasonably well prepared” for Saunders and Ramsden to vote for an immediate end to quantitative easing, according to HSBC economist Elizabeth Martins. Anything other than a 6-2 split in favor of continuing to buy would be a surprise.
“For a central bank that has positioned itself on the hawkish end of the global spectrum, the tone this time around could be a little more accommodating,” Martins said. The spread of the Delta Covid variant, along with uncertainty over the end of the government’s leave scheme, should help put the doves on top, she added.
Even so, this week’s meeting is likely to be “difficult” given that the annual consumer price hike of 2.5% in June was well above the BoE’s previous forecast of 1.7%, said Andrew Goodwin from Oxford Economics. Tommy stubbington
Will India’s central bank hesitate in the face of inflation?
The Reserve Bank of India faces increasing pressure to change its monetary policy as it meets this week after the country’s retail price growth hit 6.3% in May and June from a year over year, highest in 2021 and above the central bank’s target range.
In an effort to revive the Indian economy from the effects of the pandemic, the RBI left its benchmark pension rate at a historically low 4% since May 2020. the increases, which have long haunted India’s growth , could come back.
Many analysts say the latest consumer price hike will make the central bank’s conciliatory stance harder to justify. While few believe a rate hike is likely when the committee wraps up its three-day meeting on Friday, they will be watching closely for any signs the RBI is considering a hawkish turn in the coming months.
Oxford Economics has advanced its expectations for the next rate hike in the first quarter of 2022, while Nomura expects a cumulative increase of 0.75 percentage points over the next year.
But with India’s economy still vulnerable, policymakers could find themselves in an unenviable position. Expectations of an economic rebound this year have been tempered by a fierce second wave of Covid. With low immunization coverage and concerns about a new outbreak of infections, dizzying growth is not yet assured.
“The RBI is clearly reluctant to rock the boat,” Oxford Economics analysts wrote in a recent memo. “However, with underlying price pressures becoming widespread and persistent, we believe it will face increasing pressures to review the balance of economic risks in the coming months.” Benjamin parkin