Monex: Bank of England leaves policy unchanged
Monex: Bank of England leaves policy unchanged
This is a commentary by Simon Harvey, FX Market Analyst at Monex Europe, on the Bank of England's decision concerning the interest rate.
While developments have been positive since the February meeting, the Bank of England (BoE) decided to marginally push back against market expectations of an earlier normalisation by maintaining the current pace of quantitative easing (£4.4bn weekly) and requiring visible progress in inflation data towards the target. While the latter isn’t a new development from the BoE, the need to focus on how data comes in now as opposed to forecasted data was thrust into the limelight by the Fed and Chair Powell last night. The connotations of such a stance suggests the BoE may join the Fed in sitting behind the curve during the initial part of the recovery, which would be a dovish development, although it is too soon to draw such inferences. Sterling exhibited the slight unwind of hawkish expectations after the headlines came in, however, as it fell 0.17% against the dollar to touch fresh daily lows.