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4 Jun 2014
BoE to leave rates lower for longer? - BAML
FXStreet (Guatemala) - Strategists at Bank of America Merrill Lynch explained that while the debate at the Bank of England about when to start raising rates is slowly becoming more active, not even the most hawkish member of the Monetary Policy Committee (MPC) judges that an imminent hike is warranted.
Key Quotes
"As such, the BoE is unanimously expected to leave interest rates and QE on hold at 0.5% and £375bn, respectively, at its June meeting. And as usual when monetary policy is left unchanged, it is not expected to issue an accompanying statement either."
"However, while the chances of action from the MPC this month seem very slim, the BoE's Financial Policy Committee (FPC) seem highly likely to advocate/impose some tightening in mortgage credit conditions at its meeting on 17 June. Indeed, the likelihood of such action is likely to be an input into the MPC's decision: three members of the MPC are also on the FPC (Carney, Cunliffe, Bean) and, more broadly, the two Committees share information. So, for some MPC members, tighter FPC policy could add to the case for leaving interest rates lower for longer."
Key Quotes
"As such, the BoE is unanimously expected to leave interest rates and QE on hold at 0.5% and £375bn, respectively, at its June meeting. And as usual when monetary policy is left unchanged, it is not expected to issue an accompanying statement either."
"However, while the chances of action from the MPC this month seem very slim, the BoE's Financial Policy Committee (FPC) seem highly likely to advocate/impose some tightening in mortgage credit conditions at its meeting on 17 June. Indeed, the likelihood of such action is likely to be an input into the MPC's decision: three members of the MPC are also on the FPC (Carney, Cunliffe, Bean) and, more broadly, the two Committees share information. So, for some MPC members, tighter FPC policy could add to the case for leaving interest rates lower for longer."