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12 Feb 2014
Flash: Not expecting much change in BoE Inflation Report - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ is not expecting much change in today’s BoE inflation report.
Key Quotes
"The key event today in Europe will of course be the release of the Quarterly Inflation Report from the BOE and the press conference by Governor Carney. The focus will be one forward guidance given the unemployment rate is now nearly at the 7.0% threshold."
"We doubt the level will be altered as it would make the level meaningless and risk the BOE being wrong again. A much safer strategy would be to take a leaf out of the Fed’s book and leave the level but reduce its importance. "
"The best way to do that would be to highlight many other factors that combined will dictate the timing of a first rate increase. Lower than expected inflation and still negative real income growth along with a view that productivity will pick up should allow Governor Carney to allay fears of rate increases this year."
"The use of macro-prudential policy measures through the FPC will also be emphasised. Remember also, the BOE’s GDP projections are already very bullish with a projection of 2.9% for this year. We feel expectations are very high of a successful push back of rate expectations by Carney today that makes us feel the best risk-reward play today is to position for pound appreciation."
Key Quotes
"The key event today in Europe will of course be the release of the Quarterly Inflation Report from the BOE and the press conference by Governor Carney. The focus will be one forward guidance given the unemployment rate is now nearly at the 7.0% threshold."
"We doubt the level will be altered as it would make the level meaningless and risk the BOE being wrong again. A much safer strategy would be to take a leaf out of the Fed’s book and leave the level but reduce its importance. "
"The best way to do that would be to highlight many other factors that combined will dictate the timing of a first rate increase. Lower than expected inflation and still negative real income growth along with a view that productivity will pick up should allow Governor Carney to allay fears of rate increases this year."
"The use of macro-prudential policy measures through the FPC will also be emphasised. Remember also, the BOE’s GDP projections are already very bullish with a projection of 2.9% for this year. We feel expectations are very high of a successful push back of rate expectations by Carney today that makes us feel the best risk-reward play today is to position for pound appreciation."