For most people, staying late at the office either means picking up a kebab on the way home or fixing baked beans on toast before making sure the alarm is set to get them up in time for work at eight or nine in the morning. Members of the British parliament enjoy more comfortable arrangements. Assuming they decide to turn up at all (it isn’t compulsory), the earliest they have to get to work is 9.30am on Thursdays and Fridays, 11.30am on Tuesdays and Wednesdays and 2.30pm on Mondays. If they have to work later than 7.30pm they can claim £15 for their evening meal. Sounds generous? Not according to the MPs who lined up to complain to the Independent Parliamentary Standards Authority yesterday. Believe it or not, they want more. Quelle surprise!
The surprise was clearly more genuine when the Bank of Japan announced this morning that it would step up its bond-buying programme to ¥7tr (£49bn) a month in pursuit of a 2% inflation rate. Investors had been doubtful that the new governor, Haruhiko Kuroda, would be able to carry the committee to such a bold decision. BoJ-watchers had penciled in a figure of ¥5.2tr a month and even that had had a big question mark next to it. Market reaction was swift and electric. Within half an hour the yen had weakened by -1.7% and the Nikkei 225 stock index was 4.4% higher. Investors evidently believe Kuroda San means business.
The falling yen was the only currency to see any significant movement in the last 24 hours. The pound is literally unchanged against the euro and almost so against the US, Canadian, Australian and New Zealand dollars, where the change is a quarter of a cent or less. The Swiss franc was the day’s top dog, strengthening by a quarter of a cent against the pound which obviously factored into how moneycorp’s send money online feature performed.
Wednesday’s economic statistics were less than inspiring. Britain’s construction sector purchasing managers’ index (PMI) was half a point higher at 47.2 but fractionally short of forecast. Euroland (provisional) inflation was on target at 1.7%. The American services PMI, which was supposed to have been almost unchanged, was a point and a half lower at 54.4 and ADP’s employment change figure was a disappointing 158k. Australia’s services PMI suffered a 13th month in the contraction zone with a reading of 49.6 for March. The only glimmer of light was a 1.3% monthly rise in Australian retail sales, four times the expected increase which helped in money transfers.
Today brings the services PMIs from around Europe, of which the German and British figures are the only ones expected to be above 50, and the monthly policy announcements from the Bank of England and the European Central Bank. No change is expected to euro or sterling benchmark interest rates and it is unlikely that the Bank of England’s Monetary Policy Committee will have decided to extend its asset purchase programme.
No excitement on the cards there then, but the ECB president’s press conference this afternoon ought to be interesting. He will surely have to say something about the Cyprus bailout(/bail-in). With a bit of luck he will also clarify the ECB’s stance on providing liquidity to banks elsewhere in peripheral Europe should they suffer a withdrawal of deposits as a result of the Cyprus precedent.