Highlight of the day was BOE's meeting as Kristin Forbes, the most hawkish MPC members, surprisingly voted to raise the policy rate by +25 bps. GBPUSD jumped to a 2-week high of 1.2376 after the announcement, before settling at 1.2358, up +0.55%.EURGBP was more mixed as the single currency was lifted by the outcome of the Netherlands' general election. Equities were mixed. In Wall Street, gains in bank and tech shares were offset by loss in the healthcare shares. The market was concerned that Trump's new budget proposals would raise the costs for the healthcare sector and reduce federal funding for medical research. DJIA slipped -0.07% while S&P 500 was down -0.16%. European shares climbed higher centre-right Prime Minister Mark Rutte retained power in the Netherlands' election. The broad Stoxx 600 index gained +0.7% for the day. Crude oil prices retreated as data from Genscape showed that Cushing stock added 2 mmb in the week ending March 14. The front-month WTI crude oil contract slipped -0.23% to settle at 48.75, while the Brent contract was down -0.14% to close at 51.74.
BOE voted 8-1 to leave the Bank rate unchanged at 0.25%, and unanimously to leave the government bond purchases at 435B pound and corporate bond purchases at up to 10B pound. Kristin Forbes dissented as she was in favor of a +25 bps rate hike in March. The accompanying statement was more upbeat than the February one with the members voting for maintaining the status quo suggesting that "with inflation rising sharply, and only mixed evidence on slowing activity domestically, some members noted that it would take relatively little further upside news on the prospects for activity or inflation for them to consider that a more immediate reduction in policy support might be warranted". This is definitely a more hawkish move, as the February minutes noted that "for some members, the risks around the trade-off embodied in the central projection meant they had moved a little closer to those limits".
Financial markets were relieved as Dutch Mark Rutte retained power and his pro-EU centre-right VVD remained the biggest party. Meanwhile, the anti-EU PVV party received just 13% of the vote share. European leaders welcomed the election outcome. German Chancellor Merkel noted that she believed "many people are [glad] that a high turnout led to a very pro-European result". Centrist French presidential candidate Emmanuel Macron described it as "a breakthrough for the extreme right is not a foregone conclusion". Meanwhile, European Commission President Jean-Claude Juncker noted that "the people of the Netherlands voted for "free and tolerant societies in a prosperous Europe". The next closely-watched political event is the French presidential election is scheduled on April 23.
On the dataflow, US' Philly fed index plunged -10.5 points to 32.8 in March. This , hwoever, came in better than consensus of 25. On the housing market, housing starts increased +3.2% to 1.29M in February. The market had anticipated a milder increase to 1.26M. Building permits fell -6.2% to 1.21M in February, compared with consensus of 1.26M. The weekly initial jobless claims data unexpectedly slipped -2K to 241K in the week ended March 11. The 4-week moving average steadied at 237K. Today, the University of Michigan confidence index probably edged +0.9 point higher to 97 in March. Leading indicators might have grown +0.2% in February, down from +0.6% a month ago.