BOE MPC Minutes from today's meeting 17 March
- significant proportion of recent GBP decline reflects concern over Brexit
- more likely than not that bank rate will increase over forecast period to ensure inflation on target
- when interest rates do rise expected to do so more gradually and to a lower level than previous cycles
- loosening in global financial conditions to support UK and global economic activity if sustained
- MPC remains watchful for signs that low inflation is having more persistent second-round effects on wages
- economic activity indicators for Q1 suggest real GDP growth will maintain similar pace to Q4.
- near term inflation outlook little changed from Feb report.
"Returning inflation to the 2% target requires balancing the drag from external factors against increases in domestic cost growth. Fully offsetting that drag over the short run would, in the MPC's judgement, involve too rapid an acceleration in domestic costs, one that would risk being unsustainable and would lead to undesirable volatility in output and employment. Given these considerations, the MPC intends to set monetary policy to ensure that growth is sufficient to return inflation to the target in around two years and keep it there in the absence of further shocks."
Relief rally for GBP on not so dovish delivery on Minutes and 9-0 vote again. Head in sand or not so concerned? Unwise on the first count and misguided on the other if so. It's not exactly a hawkish set of comments, just not as dovish as markets had expected.
GBPUSD testing strong resistance/offers again around 1.4400. EURGBP back to 0.7868 after failing at the 0.7910 area I highlighted.
Full Minutes release here
