BoE: Holding its Breath - Rabobank
Jane Foley, Senior FX Strategist at Rabobank, notes that the relevance
of Bank of England (BoE) policy meetings for asset prices has paled into
insignificance recently in comparison to those of the Federal Reserve,
ECB and BoJ.
Key Quotes
“While there has
been a large downwards move in the value of sterling this year mostly
on the back of Brexit risk, it is unclear to what extent this will
influence BoE policy. It is possible that the inflationary implications
of a weaker pound may be offset by downside risks to growth stemming
from reduced investment inflows if the UK were to leave the EU.
Next
month’s publication of the Quarterly Inflation Report will provide
updated projections on inflation which may provide some insight to how
the weaker position of the pound could impact policy going forward.
We
would expect that the Bank will err on the side of caution and expect
steady rates at least until February 2017. On the back of Brexit fears,
the influence of the broad improvement in risk appetite noted from
mid-February failed to have a sustained impact on UK money market rates
through March. The markets see a greater probability of a rate cut at
least through until the middle of next year.”
(Market News Provided by FXstreet)
