BoE: Carney’s speech likely to focus more on monetary easing – TDS

Research Team at TDS, suggests that BoE announced late yesterday that Governor Carney would be delivering a speech at 4pm today.

Key Quotes

“We think that this speech could be very important in setting the tone for what kind of stimulus to expect from the BoE over the next few months. The speech could lay out exactly what type(s) of stimulus the BoE is considering delivering, whether it be rate cuts, gilt purchases, corporate bond purchases, or something else altogether. And it could set expectations for timing, since if the MPC wants fresh economic forecasts in an updated Inflation Report before making any big decisions, then Carney will likely say something to that effect to prevent markets from being disappointed with any lack of action at the 14 July meeting, and ready instead for an announcement at the 4 August meeting.

And if the BoE’s thinking is in line with our forecast for a 50bps rate cut in August, then Governor Carney may hint that markets are not pricing in enough easing at the moment, with only 25bps of cuts priced in for year-end. We think that Carney’s speech is likely to go considerably further than his post-referendum statement, focusing more on monetary easing rather than simply providing liquidity.”