1 Aug 2013
Flash: As for the BoE – TD Securities
FXstreet.com (Barcelona) - Marcin Budkiewicz, Strategist, Rates and FX Research at TD Securities anticipated the BoE.
Key Quotes:
“As for the BoE ,Bank Rate, QE, and FLS should be left unchanged, but the odds of a surprise are a little higher than usual with the MPC having re-evaluated all of its easing options”.
“We also presume that there will be another statement published although that is not a forgone conclusion either, as the Bank is in trickier water in not wanting to give markets reason to push rates higher, but not ready to give forward guidance until the Inflation Report next week”.
“The market focus will be on what exactly the MPC does with last month’s key sentence: “The significant upward movement in market interest rates would, however, weigh on that outlook; in the Committee’s view, the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.” “
“Since the last BoE meeting, markets are fully pricing in the first tightening in 2016, while gilt yields remain high but have rallied 10-20bps in the 5-10y sector”.
“So the message that higher rates weigh on the outlook should remain to keep rates in check with a risk they leave in the “not warranted” language to drive a much larger rally in the rates space and pull back in GBP”.
Key Quotes:
“As for the BoE ,Bank Rate, QE, and FLS should be left unchanged, but the odds of a surprise are a little higher than usual with the MPC having re-evaluated all of its easing options”.
“We also presume that there will be another statement published although that is not a forgone conclusion either, as the Bank is in trickier water in not wanting to give markets reason to push rates higher, but not ready to give forward guidance until the Inflation Report next week”.
“The market focus will be on what exactly the MPC does with last month’s key sentence: “The significant upward movement in market interest rates would, however, weigh on that outlook; in the Committee’s view, the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.” “
“Since the last BoE meeting, markets are fully pricing in the first tightening in 2016, while gilt yields remain high but have rallied 10-20bps in the 5-10y sector”.
“So the message that higher rates weigh on the outlook should remain to keep rates in check with a risk they leave in the “not warranted” language to drive a much larger rally in the rates space and pull back in GBP”.