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14 May 2015
BoE comfortable with market rate hike expectations – BTMU
FXStreet (Barcelona) - The BoE’s Quarterly Inflation Report suggests that the central bank remains comfortable with market expectations for a rate lift-off from Q2 2016, with the recent strength in GBP a reason behind the cautious outlook, according to Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ.
Key Quotes
“The pound’s recent strength has been dampened by the release yesterday of the more dovish than expected BoE Quarterly Inflation Report. The BoE signalled in the report that they comfortable with current market pricing for gradual rates in the coming years likely starting from around Q2 2016.”
“The BoE’s updated inflation projections were largely unchanged showing more downside risk next year but no change to the risk assessment over the policy relevant horizon.”
“The BoE also made modest downward revisions to their economic growth forecasts although still expects the economy to expand solidly in the coming years.”
“The performance of the UK economy remains supportive for the pound. The strengthening pound is one factor which is prompting the BoE to display a cautious outlook for policy tightening ahead.”
“The release yesterday of the latest UK employment report also provided further reassurance that the wage growth is picking-up in the UK as the labour market continues to tighten. Still the BoE downgraded their forecast for wage growth this year in their latest Quarterly Inflation Report.”
Key Quotes
“The pound’s recent strength has been dampened by the release yesterday of the more dovish than expected BoE Quarterly Inflation Report. The BoE signalled in the report that they comfortable with current market pricing for gradual rates in the coming years likely starting from around Q2 2016.”
“The BoE’s updated inflation projections were largely unchanged showing more downside risk next year but no change to the risk assessment over the policy relevant horizon.”
“The BoE also made modest downward revisions to their economic growth forecasts although still expects the economy to expand solidly in the coming years.”
“The performance of the UK economy remains supportive for the pound. The strengthening pound is one factor which is prompting the BoE to display a cautious outlook for policy tightening ahead.”
“The release yesterday of the latest UK employment report also provided further reassurance that the wage growth is picking-up in the UK as the labour market continues to tighten. Still the BoE downgraded their forecast for wage growth this year in their latest Quarterly Inflation Report.”