Events that marked the week:
Wednesday brought UK Industrial Production data. Total production output is estimated to have decreased by 0.4% between Quarter 4 (Oct to Dec) 2015 and Quarter 1 (Jan to Mar) 2016. The largest contribution to the quarterly decrease came from mining & quarrying, which fell by 2.3%. Total production output is estimated to have increased by 0.3% in March 2016 compared with February 2016. Analysts were predicting increase by 0.7%. There were increases in 3 of the 4 main sectors, with the largest contribution coming from electricity, gas, steam & air conditioning output, which increased by 3.3%.
Focus of the Thursday's session was on BoE
interest rate decision and the following Minutes. The Bank of England cut its growth forecasts and issued its strongest warning yet that a vote to leave the European Union would hurt the economy. With just six weeks to go until Britain's referendum, the nine-member Monetary Policy Committee, led by Governor Mark Carney, said there were more signs it was weighing on growth and clouding the outlook.
Officials unanimously agreed to maintain their benchmark rate at a record-low 0.5 percent, saying inflation remains subdued.
A vote to leave the EU "could lead to a materially lower path for growth and a notably higher path for inflation," the central bank said in its quarterly Inflation Report. "Sterling is also likely to depreciate further, perhaps sharply." The BOE provided a detailed assessment of the risks surrounding a Brexit, saying it could lead to a prolonged period of uncertainty, hurt capital inflows, raise risk premia, increase bank funding costs and threaten financial stability. Carney has maintained he is neutral in the debate and that it would be "political" of him to suppress the central bank's analysis of the risks.
This week markets will be looking at:
CPI/PPI (Tuesday 10:30)
Claimant Count Change/Unemployment Rate (Wednesday 10:30)
Retail Sales (Thursday 10:30)
