Bank of England in No Rush To Raise Rates, GBP/USD Sinks
The quarterly Bank of England (BOE) inflation reports the recent strong performance of the UK economy has continued and output has grown robustly as unemployment has fallen further and inflation is close to the 2 percent target. Yet, they are in no rush to raise rates as the BOE sees scope to reduce slack further. Other headlines and comments from BOE Carney are as follows:
Bank of England Quarterly Inflation Report Headlines
- Margin of UK Spare Capacity has narrowed slightly. Scope to reduce slack further before rate increase. Path of slack uncertain. Sees margin of slack broadly closed in 3 years.
- Economy performing strongly; sees 3.4% growth in 2014. Gradual productivity increase should support recovery.
- British Pound strength should damp near-term inflation.
- Equilibrium unemployment rate 5.25% - 5.75% in 3-years.
- Forecasts CPI at 1.8% in 2014 and 2015, 1.9% in 2016
- Forecasts 2015 GDP growth of 2.9% vs 2.7% in February.
Bank of England Carney Comments
- Bank rate may need to stay at low levels for some time
- Timing of rate increase will depend on economy.
- Volatility may rise as economies normalize.
- Current low CPI partly due to one-off factors.
- Economy moving closer to rate-increase point. Timing of rate increase will depend on economy.
- Slack estimate is cautious. Significant slack in labor market.
GBP/USD 5-minute – using FXCM Marketscope 2.0.
-- Written by David Maycotte, DailyFX Research Team. Questions, comments or concerns can be sent to email@example.com.
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