BoE Strongly Expected to Leave Rates on Hold

The Bank of England’s (BOE) Monetary Policy Committee (MPC) meets Thursday and is expected to keep interest rates unchanged, marking a sharp turnaround from early projections just a few weeks ago.A month ago, short-term interest rates had been pricing in another 25 basis point rate hike with near certainty (90 percent odds). But Governor Mark Carney lowered expectations after dovish comments he gave in an interview with the BBC, referring to data that was coming in on the “softer side.” He added that there “may be some differences of view at the May meeting, but that it is a view we take … conscious that there are other meetings over the course of the year.”Markets were quick to slash hiking odds in May to 50 percent. Only a week later, the first quarter GDP (gross domestic product) print came in at a tepid 0.1 percent quarter on quarter, below consensus of 0.4 percent and the BOE’s own forecast of 0.3 percent. Short-term interest rates are now pricing in less than a 10 percent probability of a hike this Thursday.

Source: Bank of England: Rate hike looks set to be postponed – CNBC

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.