12 Feb 2015
BoE stands out closer to the Fed in world of easing - TDS
FXStreet (Guatemala) - Jacqui Douglas, Senior Global Strategist at TD Securities noted todays BoE's inflation report.
Key Quotes:
"With a relatively neutral tone, the BoE still came out as somewhat hawkish."
"The QIR told a fairly positive story, with GDP forecasts revised higher, wage growth revised higher, the unemployment rate revised lower, and the output gap estimate cut from around 1% in November to only around 0.5% now and now see closing that gap by the middle of the forecast horizon rather than the end."
"As for inflation, while the BoE sees near-term CPI bottoming out around flat in Q2, two-year ahead CPI has been bumped up from 1.80% to 1.96%, its highest expected level since Q3 2013, and three-year ahead CPI is forecast to come in at 2.15, implying that there is probably not enough tightening priced into markets in the 2-3 year horizon."
"So in contrast to the rest of Europe, where the Riksbank was the latest central bank to join the negative rate race earlier this morning, that still leaves the Bank of England standing out in a world of easing biases, and a lot closer to the Federal Reserve’s stance than the stance of any European central bank."
Key Quotes:
"With a relatively neutral tone, the BoE still came out as somewhat hawkish."
"The QIR told a fairly positive story, with GDP forecasts revised higher, wage growth revised higher, the unemployment rate revised lower, and the output gap estimate cut from around 1% in November to only around 0.5% now and now see closing that gap by the middle of the forecast horizon rather than the end."
"As for inflation, while the BoE sees near-term CPI bottoming out around flat in Q2, two-year ahead CPI has been bumped up from 1.80% to 1.96%, its highest expected level since Q3 2013, and three-year ahead CPI is forecast to come in at 2.15, implying that there is probably not enough tightening priced into markets in the 2-3 year horizon."
"So in contrast to the rest of Europe, where the Riksbank was the latest central bank to join the negative rate race earlier this morning, that still leaves the Bank of England standing out in a world of easing biases, and a lot closer to the Federal Reserve’s stance than the stance of any European central bank."