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9 Aug 2013
Flash: BoE Minutes (Wed 14 Aug) – TD Securities
FXstreet.com (Barcelona) - These minutes should be quite interesting, said Jacqui Douglas, Senior Global Strategist, Rates and FX Research at TD Securities, since they should give us a better sense of the deliberations around implementing forward guidance, and exactly how widespread its support is within the MPC.
Key Quotes:
“Our understanding is that the MPC held three votes – one on Bank Rate, one on QE, and an additional one on forward guidance”.
“Our view is that there may be a little more dissent than markets are prepared for, and we’re looking for a vote of 9-0 for Bank Rate unchanged, 8-1 for QE unchanged, with Miles returning to dissent for another £25bn of QE, and 8-1 or possibly 7-2 for forward guidance”.
“The dissent(s) on forward guidance could have taken several forms, with potential disagreements around the unemployment rate threshold, on the level of the inflation knock-out, or even on the merits of forward guidance in genera.”
“…given the differing views on the MPC on the prospects for productivity growth and on inflationary pressures and the amount of slack in the economy, we would prepare for some amount of dissent, although from no more than one or two MPC members, otherwise we don’t think that the BoE would have gone through with forward guidance”.
“…our feeling here is while market rates moved higher on the Inflation Report this week due to market angst over the inflation knock-out, this is now fully priced in and markets going forward will now move more on shifts in the anchor to forward guidance, which is the unemployment rate”.
Key Quotes:
“Our understanding is that the MPC held three votes – one on Bank Rate, one on QE, and an additional one on forward guidance”.
“Our view is that there may be a little more dissent than markets are prepared for, and we’re looking for a vote of 9-0 for Bank Rate unchanged, 8-1 for QE unchanged, with Miles returning to dissent for another £25bn of QE, and 8-1 or possibly 7-2 for forward guidance”.
“The dissent(s) on forward guidance could have taken several forms, with potential disagreements around the unemployment rate threshold, on the level of the inflation knock-out, or even on the merits of forward guidance in genera.”
“…given the differing views on the MPC on the prospects for productivity growth and on inflationary pressures and the amount of slack in the economy, we would prepare for some amount of dissent, although from no more than one or two MPC members, otherwise we don’t think that the BoE would have gone through with forward guidance”.
“…our feeling here is while market rates moved higher on the Inflation Report this week due to market angst over the inflation knock-out, this is now fully priced in and markets going forward will now move more on shifts in the anchor to forward guidance, which is the unemployment rate”.