29 Aug 2013
Flash: Carney impact limited on GBP/USD - BTMU
FXstreet.com (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that BoE Governor Carney’s much anticipated first speech yesterday has had only a limited impact upon the pound and UK short rates.
Key Quotes
“Governor Carney took the opportunity to reassure households and businesses that the Bank rate is likely to remain low in the coming years emphasizing that interest rates on 70% of loans to households and more than 50% of loans to businesses are linked to the Bank rate.”
“However, he did not specifically attempt to talk down UK short rates although did warn that developments will be watched closely.”
“If tighter overall monetary conditions lead to the recovery falling short of the “strong” growth needed, the BoE will consider implementing further monetary easing.”
“Governor Carney also confirmed that the BoE will reduce the level of required liquid assets for major banks and building societies by GBP90 billion. It should encourage greater lending to the economy helping to support growth.”
Key Quotes
“Governor Carney took the opportunity to reassure households and businesses that the Bank rate is likely to remain low in the coming years emphasizing that interest rates on 70% of loans to households and more than 50% of loans to businesses are linked to the Bank rate.”
“However, he did not specifically attempt to talk down UK short rates although did warn that developments will be watched closely.”
“If tighter overall monetary conditions lead to the recovery falling short of the “strong” growth needed, the BoE will consider implementing further monetary easing.”
“Governor Carney also confirmed that the BoE will reduce the level of required liquid assets for major banks and building societies by GBP90 billion. It should encourage greater lending to the economy helping to support growth.”