Daily Economic Outlook: 20th October, 2015

Fears of an immediate Chinese hard landing have subsided a little on the back of yesterday's stronger-than-expected official Q3 GDP figures of 6.9% y/y. Although the pace of activity edged down a little from the 7.0% posted in Q2, a recent boost to government spending and the prospect of further monetary policy easing by the People's Bank of China is expected to support medium-term growth, says Lloyds Bank.  

Consequently, with next week's FOMC policy decision coming into view, attention is likely to shift towards the domestic US picture. Today's US housing starts and building permits figures for September are expected to show a continuation of the post-Q1 pickup in housing market activity.  However, given the recent signs of a deepening division within the Committee about the prospects of a near-term rise in inflation, today's comments by Governor Powell, who has not yet publicly opined on the policy outlook since the September meeting, and New York Fed President Dudley, are likely to attract more scrutiny as signals about the FOMC's centre of gravity. 

On the domestic front, today also sees a speech by MPC member Ian McCafferty who has been alone in voting for a 25bp hike in the Bank Rate in each of the last three policy meetings. Mr McCafferty is likely to reiterate his concerns about underlying price pressures and his belief that an immediate hike would increase the likelihood of a gradual path for policy tightening. BoE Governor Mark Carney is also appearing before the Treasury Select Committee this morning although this is likely to focus upon macro-prudential concerns, added LLoyds Bank.