TD Securities economists analyze the Bank of England's interest rate decision and its implications for the GBP/USD pair.
Hardline pause (15%)
Most of the Policy Summary remains unchanged from February. However, echoing Pill's recent comments, a line is added that the majority of the Monetary Policy Committee still thinks rate cuts remain “quite a ways off”, effectively ruling out a May cut and seriously putting June is in doubt. GBP/USD +0.50%.
Neutral pause (65%)
The Monetary Policy Committee maintains almost all the key guidance of the February Monetary Policy Summary, especially “policy should be restrictive for a long period of time until the risk of inflation rising above the 2% target disappears.” “. The market recognizes that core inflation data is softer due to recent downward surprises in inflation, wages and growth. GBP/USD -0.15%.
Moderate pause (20%)
The Monetary Policy Committee downgrades the February Monetary Policy Summary item on core inflation to something like “key indicators of inflation persistence have improved in recent months.” On the other hand, the language around policy remaining “restrictive for a long period of time” also fits to suggest that the MPC is starting to think more seriously about rate cuts. This scenario is effectively a signal from the MPC that May is a live meeting. Another scenario that would convey a similar message would be to see a senior deputy governor (e.g. Broadbent) vote in favor of a cut. GBP/USD -0.80%.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
