BOE to Show Unanimous Rate Hold, Eyes on Inflation

On June 17 the Bank of England (BoE) will publish the minutes from its Monetary Policy Committee (MPC) meeting earlier this month. The vote is likely to remain at zero against versus nine in favor to hold the Old Lady’s benchmark interest rate at 0.5%. Two of the nine MPC members in the last go-around hinted the decision was finely balanced between holding and raising rates, but since last month, there hasn’t been enough evidence inspire a vote against holding rates. That being said, earlier today BoE policymaker Ian McCafferty said that some of the headwinds holding back the economy were starting to fade and could warrant a rate increase. This marks the first time a member of the MPC has discussed a rate hike since the fall of 2014 where pessimism toward the economy started to show from the central bank. The inflation data on June 16 will be more telling on how close the U.K. is to an actual rate hike as it must avoid the deflation which Governor Mark Carney has insisted is in a transitory state. Higher food and oil prices will validate Carney’s statement on the temporary nature of deflation, but in a global low-rate environment, it will be harder for the U.K. to surprise the market with an accelerated rate of growth to justify a rate hike anytime soon.



This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza