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20 May 2015
BoE Minutes somewhat hawkish – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team comments on the Bank of England’s MPC Meeting Minutes, and further shares the subsequent reaction in the UK gilt yields and GBP/USD.
Key Quotes
“Bank of England minutes were released earlier and sounded somewhat hawkish. To us, this seemed in line with the BOE Quarterly Inflation report. But the market was probably caught off guard following the April CPI, which fell year-over-year for the first time since 1960.”
“Even though inflation remains non-existent, wages are recovering, and there is a concern about pass-through inflation stemming from sterling's past depreciation.”
“The minutes noted that slack should be fully absorbed within a year and that inflation weakness likely to be temporary, set to pick up toward end-2015.”
“UK gilt yields are up as much as 5 bp following the release, in contrast with flat yields in Europe and slightly lower in the US overnight. The pound, however, showed little sustained reaction and remains stable at around $1.55.”
Key Quotes
“Bank of England minutes were released earlier and sounded somewhat hawkish. To us, this seemed in line with the BOE Quarterly Inflation report. But the market was probably caught off guard following the April CPI, which fell year-over-year for the first time since 1960.”
“Even though inflation remains non-existent, wages are recovering, and there is a concern about pass-through inflation stemming from sterling's past depreciation.”
“The minutes noted that slack should be fully absorbed within a year and that inflation weakness likely to be temporary, set to pick up toward end-2015.”
“UK gilt yields are up as much as 5 bp following the release, in contrast with flat yields in Europe and slightly lower in the US overnight. The pound, however, showed little sustained reaction and remains stable at around $1.55.”