signals for an imminent rate hike fell on Thursday from weaker than expected. The key interest rate at 0.5 percent lie further, the Bank of England said in London. At this level, it is for more than six years. The volume of the bond program, which has been fully utilized since the autumn of 2012, has also not changed. Bank Economists had expected the decision.
Immediately after announcement of the decision was the British pound down significantly. The euro rose to its intraday high of 0.7043 pounds. Courses British bonds also rose significantly, in turn, yields declined. Even government bonds in the euro zone rose in part sharply.
low inflation
The market reactions are due to the fact that experts had expected stronger signals for an imminent rate hike. So was expected two to three votes against the current interest rate decision. However, it agreed with Ian McCafferty only a member of the central bank for a rate hike. Most economists expect until next year with the first interest rate increase after the financial crisis.
The cautious attitude of central bankers is primarily due to weaker expectations for inflation. As is apparent from the Inflation Report of the central bank, the central bankers expect this year with an inflation rate of just 0.3 percent, only slightly above the zero line. For 2016 they expect an increase of 1.5 percent. Both values were reduced.
oil prices and STRONG POUND
The reasons for that, among other things, the low oil prices, as is apparent from the transcript of the interest rate decision. Also, the currently strong pound dampens inflation through cheaper imports. The Fed had the protocol and the Inflation Report published for the first time to coincide with the interest rate decision. With the measure, the Bank of England will increase the transparency of its decisions.
No comments:
Post a Comment