29 Nov 2013
Flash: BoE; glass half full – Rabobank
FXstreet.com (London) - Strategists at Rabobank noted that since its last policy meeting the MPC has published its Quarterly Inflation Report.
Key Quotes:
“The Bank now expects that inflation will remain “persistently a little below target in the later part of the forecast period”.
“The MPC assesses the chances of inflation being at or above 2.5% towards the end of the next year to be only around one in three – much lower than in August”. While this may point to a more dovish central bank, the MPC also stated that they now expect the 7% unemployment rate threshold to be reached earlier than they did in August”.
“While the Bank will only start to consider hiking rates at this point, this still suggests that the Bank could be ready to hike rates in 2015 rather than 2016”.
“The BoE has also this month announced measures to address “emerging vulnerabilities” in the housing market. As part of its Financial Stability Report, the Bank announced a change to its Funding to Lending scheme so that incentives will now only apply to business lending and not household credit”.
“It will be interesting to see how the MPC assess the risks posed by the housing sector in its forthcoming meetings and whether the Bank do make use of the new macro-prudential tool. This is being created so that the affordability criteria that mortgage borrowers must meet can be varied”.
Key Quotes:
“The Bank now expects that inflation will remain “persistently a little below target in the later part of the forecast period”.
“The MPC assesses the chances of inflation being at or above 2.5% towards the end of the next year to be only around one in three – much lower than in August”. While this may point to a more dovish central bank, the MPC also stated that they now expect the 7% unemployment rate threshold to be reached earlier than they did in August”.
“While the Bank will only start to consider hiking rates at this point, this still suggests that the Bank could be ready to hike rates in 2015 rather than 2016”.
“The BoE has also this month announced measures to address “emerging vulnerabilities” in the housing market. As part of its Financial Stability Report, the Bank announced a change to its Funding to Lending scheme so that incentives will now only apply to business lending and not household credit”.
“It will be interesting to see how the MPC assess the risks posed by the housing sector in its forthcoming meetings and whether the Bank do make use of the new macro-prudential tool. This is being created so that the affordability criteria that mortgage borrowers must meet can be varied”.