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6 Jan 2014
Flash: BoE to lower unemployment thresholds - RBS
FXstreet.com (London) - Strategist at RBS explained there has been increased speculation about whether the BoE is set to lower its unemployment threshold.
Key Quotes:
“Such a move is likely to be seen as GBP negative on expectations of lower yields. We very much doubt we are set to see a move at this Thursday's policy meeting”.
“The February MPC/Inflation Report would seem more likely if such a move is coming. Whilst the BoE might face accusations about moving the goalposts, there remains a vocal constituency in favour of low rates in policy circle given the continued tight fiscal policy stance. Also, lowering the threshold could be an effective way of countering the upward drift in market rates (the first 25bp Rate hike is currently priced in by year end, presumably earlier than the MPC would want”.
Key Quotes:
“Such a move is likely to be seen as GBP negative on expectations of lower yields. We very much doubt we are set to see a move at this Thursday's policy meeting”.
“The February MPC/Inflation Report would seem more likely if such a move is coming. Whilst the BoE might face accusations about moving the goalposts, there remains a vocal constituency in favour of low rates in policy circle given the continued tight fiscal policy stance. Also, lowering the threshold could be an effective way of countering the upward drift in market rates (the first 25bp Rate hike is currently priced in by year end, presumably earlier than the MPC would want”.