The European Central Bank cut its deposit rate below zero and said it would announce further measures later today as policy makers try to counter the prospect of deflation in the world’s second-largest economy.
A Labour Party government without a parliamentary majority would be a “nightmare scenario” for the pound, pushing it to its weakest level versus the dollar since March 2009 and close to parity with the euro, Investec Plc said.
The data docket in the U.S. this week will be eclipsed by the Federal Reserve meeting as prospects mount that policy makers will trim stimulus in response to an improving economy. Elsewhere, November price data out of the U.K. will probably show inflation is cooling toward the Bank of England’s target, German companies gained confidence in December and inflation in Brazil picked up through the middle of this month.
Kristin Forbes, a former White House adviser who’s set to join the Bank of England’s rate-setting committee, may give clues today about her leanings as officials move toward the first policy tightening in seven years.