ECB Keeps Rates On Hold Once More

Thursday, 20th October: British retail sales data completed the hat-trick of UK economic data this week. The Office for National Statistics today revealed that retail sales in the UK in the 3 months to September grew by 1.8%, up from 1.1% in the three months to June and the fastest rate since Q4 of 2014. Year-on-year, third quarter sales were 5.4% higher. But in September alone, higher prices and unusually warm temperatures meant there was no growth, with the biggest monthly falls in clothing and footwear.  Today’s data adds to concerns for consumers of rising prices that are set to become apparent in the months to come.

The European Central Bank’s (ECB) President Mario Draghi today left their monetary policy unchanged but signalled that they may extend their program of bond purchases past its current scheduled expiry of March. The central bank decided to keep its key interest rate at a record low of 0%, unchanged since March whilst also leaving the deposit rate at -0.4%. The ECB target inflation of just under 2% but the region’s annual rate of inflation was 0.4% in September. The euro has been strengthening of late against the pound and today, despite a short and sharp spike against the sterling (appreciating more than 1% momentarily), it is currently flat against the pound. GBP/EUR is €1.12 at the time of writing.

Big movers in stock specific news today were from the FTSE 250’s NCC Group and Keller Group. NCC, a cyber security group warned that they have had some contract cancellations and renewal difficulties in the first 4 months of their year, although claiming it is too early to say what affect this will have on their financial year. Ground engineering specialists Keller issued a Q3 trading update, bringing a profit warning to investors’ attention, citing difficulties in the Asia-Pacific region, with disappointment from the Canadian region also. However, they did acknowledge their strong order book, at an all time high, including a recently announced £60m contract in Egypt. The stocks ended the day lower by 35.49% and 27.22% respectively.