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21 Oct 2013
Flash: MPC to turn more hawkish?
FXstreet.com (London) - Jane Foley, Senior Currency Strategist at Rabobank notes that The BoE will release the minutes of its policy meeting on October 23.
Key Quotes:
“The better tone of UK economic data over the past 3 month or so suggests that there were likely no votes in favour of further policy stimulus at this month’s”.
“While we expect that there is nothing to be gained by completely shutting the door of the possibility of further easing at this juncture, what the market will be looking for are signs that the MPC may be easing towards a slightly more hawkish tone”.
“In recent weeks MPC members have worked hard to clarify their forward guidance. The message has been that a drop in the unemployment rate to 7% will not trigger a rate hike but will be a point at which the Bank will start to consider tightening policy. While money market rates had began to point to the possibility of a BoE rate hike before the end of next year, it is notable that this view is not reflected in economists’ surveys”.
“The collective view of economists is that the BoE are unlikely to hike rates before 2015, a sizeable minority expect no rate hike before 2016. Given that there is a lot of positive news already priced in to sterling, we do not expect the MPC minutes to have the capacity to lend more than modest support this week. That said, given that the USD is on the back foot cable is likely to remain well supported”.
Key Quotes:
“The better tone of UK economic data over the past 3 month or so suggests that there were likely no votes in favour of further policy stimulus at this month’s”.
“While we expect that there is nothing to be gained by completely shutting the door of the possibility of further easing at this juncture, what the market will be looking for are signs that the MPC may be easing towards a slightly more hawkish tone”.
“In recent weeks MPC members have worked hard to clarify their forward guidance. The message has been that a drop in the unemployment rate to 7% will not trigger a rate hike but will be a point at which the Bank will start to consider tightening policy. While money market rates had began to point to the possibility of a BoE rate hike before the end of next year, it is notable that this view is not reflected in economists’ surveys”.
“The collective view of economists is that the BoE are unlikely to hike rates before 2015, a sizeable minority expect no rate hike before 2016. Given that there is a lot of positive news already priced in to sterling, we do not expect the MPC minutes to have the capacity to lend more than modest support this week. That said, given that the USD is on the back foot cable is likely to remain well supported”.