Asian markets open the week higher as lifted by news from China over the weekend. The PBoC lowered interest rates for the third time in six months. The one year lending rate was cut by 25bps to 5.1% starting May 11. The benchmark deposit rate was also lowered by 25bps to 2.25%. The Chinese central bank noted that "China's economy is still facing relatively big downward pressure," and, "at the same time, the overall level of domestic prices remains low, and real interest rates are still higher than the historical average." Some economists noted that the intensity of policy easing since last year would be at least be enough to halt the slowdown in the economic. However, some also noted that so far, the cut of benchmark rates was not passed through to the economy effectively as borrowing costs have lowered just marginally. After all, it's generally expected that more policy easing would be launched later this year by the Chinese authority to revive the momentum of economic growth. In the currency markets, Aussie received not much support from the news and is trading mildly lower.
Eurogroup meeting in Brussels will be a focus today. Greek officials are hopeful that Eurozone finance ministers would recognize the reforms the country has made. Prime minister Alexis Tsipras said "We want a clear confirmation of the progress that has been made." Greek also noted that they will honor a payment of EUR 750m to IMF due tomorrow. Regarding the new reform deal that Greece need to agree with the international creditors, Eurogroup chair Jeroen Dijsselbloem said that "we have made progress, but we are not very close to an agreement." And Dijsselbloem said "it will surely not be reached at the Eurogroup meeting on Monday."
BoE will announce monetary policy decisions today and it's widely expected the the central bank will keep benchmark bank rate unchanged at 0.50%, and hold the asset purchase target at GBP 375b. Only a brief statement is expected and this could be a non event. Main focus would indeed be on the quarterly inflation report to be released on Wednesday. Markets are expecting the updated economic projections to reaffirm that inflation will start rising early next year in spite of near term deflation risk. Meanwhile, GDP growth forecast for this year could be revised lower due to weak Q1.