UK Economic Update – 26 September 2014

UK interest rate rise “drawing closer” – Mark Carney

An empty calendar for economic data in the UK left Thursday a speech from Bank of England Governor Mark Carney as the main event for sterling focused investors.  

Here the Governor, speaking at an insurance industry conference, warned against the perils of recklessness in risk management departments while drawing attention to the need to exercise caution when using internal models to calculate capital requirements under certain conditions.

In addition to this, the governor also fired a shot across the bows of investors when he stated to his audience that the time when interest rates would need to rise is “drawing closer”.

All in all, a lack of macroeconomic developments, the announcement of US air-strikes in Syria and an increase in rhetoric relating to the looming conflict in the middle east each led the FTSE 100 to a lower close for the week.

Looking ahead, the coming days see another round of manufacturing, services and construction PMI’s released to the market, providing further insight into the likely pace of the recovery as we head into the closing months of the year.

In addition to the above, US payrolls and unemployment data for September is set to provide an indication of whether, or how, the Fed’s policy stance could evolve ahead of the next FOMC statement at the end of October. This will also have a considerable effect on London markets.

FTSE 100

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