8 Apr 2014
BoE not likely to consider action until end of year - BAML
FXStreet (Guatemala) - Analysts at the Bank of America Merrill Lynch noted that expectations in respect of the Bank of England’s policy meeting this week is for there to be no change.
Key Quotes
"The BoE is universally expected to leave interest rates and QE on hold this week, with the economic backdrop for it arguably the most comfortable since prior to the financial crisis. In aggregate, evidence suggests that the UK economy continues to grow at around the 2.5-3.0% annualized pace experienced over the last year, despite a moderate easing in some survey indicators of late (eg, the PMIs). With the unemployment rate still elevated at 7.2% though and CPI inflation now a little below its 2% target (after nigh on eight years above it, Chart of the Day), the BoE judges that it has space to let the recovery build some more before actively considering raising interest rates."
"Indeed, its original Forward Guidance of not considering raising rates until the unemployment rate reaches 7% currently still applies. Some significant personnel changes at the BoE between its May and August Inflation Reports - with Bean, Fisher & Dale all exiting, to be replaced by Shafik, Haldane and a new member (not yet announced) - also add to the view that barring any exceptional events, the BoE might not seriously start to consider raising interest rates until at least late this year."
Key Quotes
"The BoE is universally expected to leave interest rates and QE on hold this week, with the economic backdrop for it arguably the most comfortable since prior to the financial crisis. In aggregate, evidence suggests that the UK economy continues to grow at around the 2.5-3.0% annualized pace experienced over the last year, despite a moderate easing in some survey indicators of late (eg, the PMIs). With the unemployment rate still elevated at 7.2% though and CPI inflation now a little below its 2% target (after nigh on eight years above it, Chart of the Day), the BoE judges that it has space to let the recovery build some more before actively considering raising interest rates."
"Indeed, its original Forward Guidance of not considering raising rates until the unemployment rate reaches 7% currently still applies. Some significant personnel changes at the BoE between its May and August Inflation Reports - with Bean, Fisher & Dale all exiting, to be replaced by Shafik, Haldane and a new member (not yet announced) - also add to the view that barring any exceptional events, the BoE might not seriously start to consider raising interest rates until at least late this year."