GBP Lower After Only One Vote for Immediate Rate Hike

The Bank of England appeared in no rush to start raising interest rates on Thursday, with minutes showing just one top policymaker voted to do so this week while the bank forecasts only a slow pick-up in inflation, which sits at zero.

Sterling fell to its lowest in nearly two weeks against the dollar, while British government bonds rallied.

BoE Governor Mark Carney reiterated that the time for an interest rate hike is drawing closer.

“However, the exact timing of the first move cannot be predicted in advance; it will be the product of economic developments and prospects. In short, it will be data dependent,” Carney said in a news conference.

Three weeks ago, Carney said the decision when to hike interest rates would likely come into “sharper relief” around the end of the year. He emphasized on Thursday that this was his own view and that it had not changed since.

Most economists taking part in a Reuters poll had expected two or even three members of the Monetary Policy Committee to vote for a rate hike. Markets pushed out their bets on when the BoE would start to raise rates to June next year from May.

via Reuters

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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