Most BoE Members See Need For Additional QE
By DailyFX - 06/20/12 - 5:43 AM EDTBy Benjamin Spier, THE TAKEAWAY: Most MPC members see need for more QE -> 5-4 vote to not add stimulus in June -> Cable stays supported During their June meeting, most of the members of the United Kingdom’s Monetary Policy Committee forecasted that more quantitative easing will be necessary in the future. The minutes from the last BoE meeting also revealed that the vote to keep the asset purchase program at 325 billion was only won by 5-4. Three of the members of the committee, including Governor Mervyn King, voted for an additional 50 million pounds of expansion, while Paul Fisher voted for an extra 25 billion pounds. The members were significantly more dovish in June’s meeting, as QE was outvoted 8-1 in the previous two meetings. However, the vote against cutting interest rates was unanimous among all 9 members. The negative effect of the European crisis on international economies was mentioned multiple times in the BoE minutes. ‘Financial market events had again been dominated by developments in the Euro area,’ began the minutes. The chances of the BoE increasing its stimulus program in the upcoming July meeting seems more likely following the minutes release and on yesterday’s news of the lowest UK inflation in 2.5 years. The annual inflation rate fell to 2.8% during May, which is still above the BoE’s target of 2% inflation. Increased chance of stimulus is usually currency negative, which is why GBD/USD sharply dropped towards 1.5650 following the minutes release. However, cable immediately reversed those losses as market sentiment stays focused on the Fed’s QE decision which is set to take place later today.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.
Latest news from section
See all news From Currencies