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Next interest rate move will be up – BOE’s Shafik

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 23, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    While testifying on inflation and the economic outlook before Parliament's Treasury Committee, Bank of England (BOE) deputy governor Shafik noted that wage growth will accelerate if the labour market continues to tighten.

    Key Quotes:

    If labour market continues to tighten, expect wage growth will pick up

    Difficult to predict timing of wage pick-up

    Believes next interest rate move will be up

    Once that uncertainty has dissipated, expect the economy to warrant a path for bank rate that increases more quickly than implied by the market yield curve

    Must be willing to be flexible to respond from surprises from world economy, financial markets

    Exceptionally low level of long-term rates can be expected to unwind as global growth recovers

    Have judged it appropriate to refrain from voting for rate hike until convinced wage growth sustained at level consistent with inflation target

    Would ordinarily expect wages to grow about 2-3% more quickly than productivity growth in order to generate inflation at target
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