No change in the MPC’s voting pattern: still one proponent for a hike. The minutes reveal a more complex picture.
GBP/USD initially jumps to 1.5430. This could change once the data is digested. Update: as the document is read, there seems to be more positives than negatives, and the pound pushes higher.
From the minutes, on the positive side:
- Core inflation is still subdued but may be firming
- UKÂ productivity has begun increasing. In the past they were somewhat puzzled by productivity.
- They see the domestic expansion as healthy. Recent figures have been OK.
And on the negative side:
- They expect inflation to pick up later in the year, probably due to the diminishing effect of falling oil prices.
- Considerable uncertainty over the impact of the pound on inflation.
more coming
The Bank of England’s Monetary Policy Committee was expected to leave the interest rate unchanged at 0.50% once again. The focus is on the votes of the 9 members, which are published at the same time since the previous meeting. In that meeting, 1 member out of 9, Ian McCafferty voted in favor of a hike to 0.75%, but Governor Carney and his colleagues all objected. Some had expected a unanimous vote on “no change†or even for one member to vote for more easing.
GBP/USD traded just under 1.54 towards the publication.
Many had expected a dovish turn from the BOE, after the Chinese crisis and the ongoing worries about the global economy. The stronger pound serves as tightening.
The first impact comes from the voting pattern and then the minutes are digested.
More: GBP/USD: Corrective Rebound – SocGen
