Bank of England minutes surprise markets
The Bank of England minutes from their 8th March meeting released yesterday provided a surprise for the financial markets. Neither of the two hawks expected to vote for a rate increase did and one member, David Blanchflower actually voted for a rate cut.
With the other 8 members voting to leave rates on hold the “dovish” minute’s poured cold water on expectations of an interest rate rise in April or May. Speculation of a rate rise had grown after the above forecast inflation data earlier this week.
Initially Sterling lost some of its recent allure falling more than half a U.S cent although the underlying recent Dollar weakness helped it to recover over the course of the afternoon.
Whilst on the subject of Interest rates the U.S Federal Reserve after its two day meeting announced last night that it would hold Interest Rates at 5.25% and dropped a reference to possible further rate hikes in the post-meeting statement. Although the Fed said after the meeting that inflation was still its main concern, investors took the change in the statement as a sign that a rate cut may be near and sold the dollar.
There were no particular references to the sub-prime mortgage sector, which did come as a relief to markets as the Fed probably wished to indicate it did not see the current sub-prime problems as threatening to the economy
As a result of the U.S Federal Reserves announcement the USD again came under pressure. The Pound reversed all of its losses seen earlier in the day and the Euro rose to the highest point since March 2005 as markets expect more eurozone interest rate hikes this year from the current 3.75%.
U.K Retail Sales for February will be released this morning closely watched by the markets. The number contracted sharply in January -1.8% so expectations today are for a rebound of around 0.5% but it is thought the general trend over the next few months will remain one of a weakening retail sector.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
With the other 8 members voting to leave rates on hold the “dovish” minute’s poured cold water on expectations of an interest rate rise in April or May. Speculation of a rate rise had grown after the above forecast inflation data earlier this week.
Initially Sterling lost some of its recent allure falling more than half a U.S cent although the underlying recent Dollar weakness helped it to recover over the course of the afternoon.
Whilst on the subject of Interest rates the U.S Federal Reserve after its two day meeting announced last night that it would hold Interest Rates at 5.25% and dropped a reference to possible further rate hikes in the post-meeting statement. Although the Fed said after the meeting that inflation was still its main concern, investors took the change in the statement as a sign that a rate cut may be near and sold the dollar.
There were no particular references to the sub-prime mortgage sector, which did come as a relief to markets as the Fed probably wished to indicate it did not see the current sub-prime problems as threatening to the economy
As a result of the U.S Federal Reserves announcement the USD again came under pressure. The Pound reversed all of its losses seen earlier in the day and the Euro rose to the highest point since March 2005 as markets expect more eurozone interest rate hikes this year from the current 3.75%.
U.K Retail Sales for February will be released this morning closely watched by the markets. The number contracted sharply in January -1.8% so expectations today are for a rebound of around 0.5% but it is thought the general trend over the next few months will remain one of a weakening retail sector.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Labels: Bank of England, FED, interest rates
posted by Drs Search @ 10:17 AM
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