BOE MPC Members Playing Down Rate Cut Possibility

The Bank of England is making a concerted effort to play down the possibility that it will respond to inflation falling to zero with a fresh cut in interest rates. Three members of Threadneedle Street’s monetary policy committee separately said that they thought inflation – which is likely to turn negative next month – would bounce back soon.

The interventions by deputy governor Minouche Shafik and two of the externally appointed members of the MPC, Kristin Forbes and David Miles, contrast sharply with comments made last week by the Bank’s chief economist, Andy Haldane. Haldane said it was possible that there had been a permanent downward move in inflation and that he could easily envisage cutting rates from their current record low of 0.5%.

But this view was not supported by Shafik, Forbes or Miles, who made their views public before the Bank goes into “purdah” later this week for the duration of the election campaign. All three echoed remarks made recently by the Bank’s governor, Mark Carney, who said it would be “foolish” to cut rates in response to a temporary fall in inflation.

via The Guardian

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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