- MPC minutes
The Cable is trading comfortably above 1.70-mark, while the Sterling together with the Aussie and Kiwi were the top three performers among nine major currencies over the last 130 trading days. This week, however, the Pound erased some of the earlier made gains after the Bank of England released its minutes, showing a unanimous vote to keep monetary policy unchanged.
Earlier this summer, Mark Carney made a surprising comment saying investors, households and companies should brace for a sooner than expected rate hike. However, later, the central bank refused giving any precise date on when the first adjustment will be made. It seems that policymakers are already confused whether they will start tightening monetary policy any time soon or it will remain accommodative for a longer period. The latest minutes showed that all nine members believe that premature tightening will leave the domestic economy vulnerable to shocks. In contrast, the risk of a small interest rate increase in the BoE derailing expansion and falling inflation in the medium term was receding, as economic recovery gets more balanced and broader-based. Some of the members believe they should focus on the rapid pace at which the remaining slack was being used up, while others warn about global weakness, saying British wages have been lagging behind the inflation growth, meaning inappropriate timing of the rate hike will have an outsize impact on the recovery.
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