Kuroda: Potential withdrawal of incentives to accelerate inflation

Japan's central bank may remove current stimulus for the economy in the form of redemption of bonds as soon as inflation reaches the target of 2%, said head of the financial institution Haruhiko Kuroda in an interview with CNBC.
This was the first stronger hint of ending the record-breaking stimulus in the Japanese economy and a testimony to the good development of the world's third-largest economy. Kuroda also talks about current issues, such as the danger of a war on trade and the manipulation of foreign exchange markets.
According to the head of the Japanese central bank, target inflation of 2% will be reached within the next five years. Then a discussion of a gradual decrease in current incentives will begin.
According to latest data, inflation in Japan is at a level of 0.5% on an annual basis until March.
Japan has the biggest monetary incentives among the world's leading developed countries at the moment. Experts also predict the bank is one of the last to remove its monetary incentives.

The euro area economy remains stable

The economy of the eurozone has kept its strong performance since the beginning of the year, with good performance stimulating companies to recruit new staff at the fastest pace in ten years.
The PMI index for manufacturing and services fell to 55.9 in October, compared to 56.7 in September, according to IHS Markit.
And although the indicator has fallen to the lowest level in two months, the rate of new job in the industrial sector has risen to the highest level since 1997.
Good data comes true shortly before the ECB's meeting this week, which is expected to cut its record-breaking stimulus to the economy.
Currently, the ECB buys back assets worth 60 billion euros, which are expected to be reduced by between 20 and 30 billion dollars from the beginning of next year.
And while inflation is still far below the expectations of the central bank, the first steps towards reducing incentives are expected to be released shortly.

Draghi appreciated the euro

The euro has appreciated, and US bonds have fallen, as ECB chief Mario Draghi has hinted that inflationary deterrents are temporary. This was accepted by market participants as a serious hint of the forthcoming normalization of the ECB's interest rate policy.
Interest rates on 10-year bonds rose by 3.7 percentage points to 2.175 percent. Bonds on two-year bonds added 2.4 basis points to 1.377%, while 30-year-olds rose by 3.3 basis points to 2.731%.
Draghi said a series of factors delayed the inflationary process, but they are generally temporary and should not cause inflation to deviate from the medium-term.
Market participants, however, read in Draghi's comment a signal for normalizing interest and monetary policy. Monetary incentives in the euro area are scheduled to end in December. It is entirely possible that they will not be prolonged beyond that period.
Interest rates on European government bonds also increased. 10-year German bonds rose by 6.4 basis points to 0.311 percent, while 10-year French bonds rose by 7.7 basis points to 0.684 percent.

Citi: The price of the pound would fall before the meeting of the Bank of England, and after it

According to the forecasts of economists of the bank, on Thursday the Bank of England will lower its key interest rate to 0.25% and will resume its program of buying assets in which over the next four months in the financial system will be infused £75 billion.

Acoording to analysts, forecasts for the economy and inflation of the country will likely to be reduced.

Market expectations for expansion of incentives were formed during the week, so for the Bank of England will be difficult to maintain the status quo, which is negative for the pound, say analysts.

The bank remains bearish about sterling and believes, that the decline in interest rates and the resumption of quantitative easing program would become a longterm signal.

Given the above, analysts of the bank see major prerequisites for decline in the pound before the meeting of the Bank of England and after it.