23 Jul 2014
BoE continues to inch towards hiking rates - ING
FXStreet (Łódź) - James Knightley from ING comments on the recently published minutes from this month's BoE monetary policy meeting, saying that they suggest that the MPC is warming up to tighten policy soon.
Key quotes
"The debate on rate hikes is starting to open up, especially with the concluding line stating that while the MPC 'agreed that no increase was warranted at this meeting… for some members the decision had become more balanced in the past few months than earlier in the year'."
"Next month’s MPC meeting coincides with a new set of economic forecasts from the Bank so that could be the catalyst for the first one or two MPC members voting for a rate rise."
"Martin Weale, who voted for a rate rise in the January-July 2011 period, would be amongst the favourites to do so, but we have to remember there has been quite a lot of churn on the committee in recent months so there could be others."
"We also must remember that the minutes to the June meeting stated 'the relatively low probability attached to a Bank Rate increase this year implied by some financial market prices was somewhat surprising'."
"Given we don’t expect any significant loss of momentum for the UK economy over the rest of the year we favour a November rate hike from the BoE with very slow and steady additional tightening of perhaps 25bp per quarter thereafter."
Key quotes
"The debate on rate hikes is starting to open up, especially with the concluding line stating that while the MPC 'agreed that no increase was warranted at this meeting… for some members the decision had become more balanced in the past few months than earlier in the year'."
"Next month’s MPC meeting coincides with a new set of economic forecasts from the Bank so that could be the catalyst for the first one or two MPC members voting for a rate rise."
"Martin Weale, who voted for a rate rise in the January-July 2011 period, would be amongst the favourites to do so, but we have to remember there has been quite a lot of churn on the committee in recent months so there could be others."
"We also must remember that the minutes to the June meeting stated 'the relatively low probability attached to a Bank Rate increase this year implied by some financial market prices was somewhat surprising'."
"Given we don’t expect any significant loss of momentum for the UK economy over the rest of the year we favour a November rate hike from the BoE with very slow and steady additional tightening of perhaps 25bp per quarter thereafter."