Portugal was once again downgraded by the rating agency Moody’s, the second time in less than a month. Moody’s said it was “driven primarily by increased political, budgetary and economic uncertainty”.
Lisbon needs to raise about €1bn to service the debts which need re-financing during the summer. The markets will be looking for above 10% return and even then it may be unable to get the full amount away with the Banks saying that they may not buy government debt unless it requests a bail out or short term loan from the European emergency bail out fund.
China’s Central Bank increased its interest rates by a further 25 base points in an effort to curb inflation. This is the fourth time the Central Bank has increased interest rates in the past year.
The OECD predicts that the UK economic growth will be much slower in the second quarter and is estimating the annualised growth will be in the region of 1% compared with a forecast of 1.3% back in November. The OECD said the governments cuts are “ambitious and necessary” to achieve a sustainable recovery.
Sterling had a good day following the release of the CIPS services PMI figures which showed a continuing growth albeit a little below the previous month. This helped Sterling make back some of the past few day’s losses. Sterling increased above 1.1450 on the Euro and 1.62 against the USD yesterday.
The minutes from the March meeting of the Federal Reserve Bank revealed that policy makers differed on how to tackle the future monetary policy. Some feel that they should be tightening conditions before the end of this year.
Today we have both the meetings of the Bank of England and the European Central Bank. It is expected that the ECB will increase interest rates by 25 base points while the BOE will once again sit and wait.
