GBP: BoE tactics will matter for the message - BAML

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 4, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Delhi) – Research Team at BAML, suggest that uncertainty about the global outlook and some domestic data wobbles are good reasons for a degree of caution near-term, so the BoE may prefer to nudge, not jolt, the market.

    Key Quotes

    “Equally, it seems unlikely that the BoE would sign up to the 1H 2017 hike implied by the market curve up to last Wednesday (the cut-off point for the BoE’s forecasts) if there is a chance of a December Fed move. On balance, we expect slightly above target and rising inflation forecasts from the BoE.”

    “Specifically, we look for the BoE to forecast 2.1% inflation at the two-year horizon and 2.2% at the three-year point. That would still give room for the dovish Andy Haldane’s point of view: such a forecast could be consistent with the BoE waiting to see how global worries pan out before subsequently hiking faster than otherwise.”

    “We look for an 8-1 vote in favour of keeping rates on hold with Ian McCafferty likely the sole dissenter. Martin Weale could call for a hike, but we think he will probably wait until inflation rises above 0%, and probably 0.5%, before pulling the trigger.”
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