Bank of England Rates on Hold, January Carney Comments Provide Insight
- BoE maintains key benchmark interest rate at 0.50%, Asset Purchase Target at 375B as expected
- No policy statement once more
- January Carney comments provide insight this decision lacks.
The Bank of England left its key benchmark rate at 0.50% and its Asset Purchase Target at 375B as expected across the board. Once more, the BoE left market participants without a policy statement, but comments from the central bank head over the past few weeks do provide insight.
Two weeks ago, Gov. Mark Carney signaled that there would be no more forward guidance from here on out as he hinted that prospects for the U.K. economy were “in a different place” relative to this past summer. This is a central banker’s way of attempting to halt/slow currency gains on speculation of future rate hikes.
Although Gov. Carney had previously given objectives for employment and inflation, the central bank did not expect these to be met in such a short time. Many market participants were expecting a policy statement here in order to further clarify those January remarks, but it appears that the sly Gov. Carney will leave it at that.
GBP/USD 5-minute Chart: February 6, 2014 Intraday
Source: FXCM Marketscope
As we have seen over the past few BoE meetings where there was no policy statement released, Cable initially saw gains that later retraced. Moving forward, we know that Gov. Carney will be wary to make comments that drive the Pound any higher. At the same time, he most likely is refraining from any verbal intervention to weaken the Pound. After all, the Cable’s strength is an indication of where the economy is going and that confidence helps boost investment within the United Kingdom.
We have the ECB Rate Decision and Draghi’s presser on tap in the next two hours:
--- Gregory Marks, DailyFX Research Team
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