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BoE Leaves Policy Unchanged But Hawk Appears on MPC

BoE Leaves Policy Unchanged But Hawk Appears on MPC

Nick Cawley, Senior Strategist

Talking Points

- The UK central bank leaves policy measures unchanged but one MPC member votes for a 0.25% rate hike.

- GBPUSD picks up after 8-1 vote.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

The Bank of England left interest rates unchanged at 0.25%, as expected, at its latest central bank meeting but a hawk appeared on the MPC with member Kristin Forbes voting for a 0.25% rate hike.

The quantitative easing gilt purchase program target was left unchanged at £435 billion, while the corporate bond buying program target was also unchanged at £10 billion. The latest BoE data shows that the £435 billion target is now met.

The BoE said in a statement, “At present, the Committee’s best collective view is that the central judgements underpinning the February (QIR) projections remain broadly on track, and so the conditioning assumption underpinning the February projections – that there will be some modest withdrawal of monetary stimulus over the course of the forecast period – remains appropriate. There are risks in both directions.

Recent data showing a fall in UK average wages will have been a concern to governor Carney ahead of today’s meeting. The latest ONS labor report showed average earnings (ex-bonus) for January falling to 2.3% from a prior 2.6%, a worrying trend, especially when the BoE expects headline inflation to hit 2.7% in 2017. The UK consumer drove the post-Brexit UK recovery and any crimping of consumer spending will provide an extra headwind for the economy as PM Theresa May looks set to trigger Article 50 by the end of March.

GBPUSD picked up on the central bank release, boosted by Forbes ’hawkish vote.

Chart: GBPUSD 5-Minute Timeframe (March 16, 2017)

Chart by IG

--- Written by Nick Cawley, Analyst

To contact Nick, email him at

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