BoE plays wait and watch

The Bank of England (BoE) has kept rates on hold and has also refrained from raising the stimulus package. While it came as a surprise to many, we at FxWirePro weren’t shocked. Governor Carney has already said that August forecast would play a decisive role in determining the stimulus. Moreover, as of now there are not enough economic data to draw conclusions from. The market has taken well to the referendum outcome than many had expected.

The Bank has however indicated that most members feel a need for easing in August but the extent of easing only be determined after receiving the August inflation and growth report.

With regard to the referendum, the bank said, “Official data on economic activity covering the period since the referendum are not yet available.  However, there are preliminary signs that the result has affected sentiment among households and companies, with sharp falls in some measures of business and consumer confidence.  Early indications from surveys and from contacts of the Bank’s Agents suggest that some businesses are beginning to delay investment projects and postpone recruitment decisions.  Regarding the housing market, survey data point to a significant weakening in expected activity.”

Only one member, Gertjan Vlieghe voted in favor of reducing the interest rates by 25 basis points. Sterling has jumped after the policy stance and currently trading at 1.334 per dollar.