FxWirePro: Carney keeps bank rates unchanged at 0.5% - how does US IRS look after Fed and BoE turbulence

The Bank of England’s keeps banks interest rates unchanged at 0.5%, monetary policy committee (MPC) sets monetary policy to meet the 2% inflation target and in a way that helps to sustain growth and employment.

At its meeting ending on 16 March 2016, the MPC voted unanimously to maintain Bank Rate at 0.5%. The Committee also voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion.

In U.S., Yellen struck a cautious tone during the press conference, stressed that the Fed’s “policy is not on a pre-set course” and that projections made by the committee are not promises. Yellen also said that the rate could be reduced to zero in the event of any shock to the financial system. The Statement continues to reiterate that the Fed remains data dependent. 

Interest Rates: The downgrade to FOMC members’ projections for economic growth, inflation and interest rates provided a supportive backdrop for interest rate markets.

Market interests drop markedly yesterday with 5yr US swap rates ending the day around 16bp lower on the day at 1.285%.

10 Year Swap Rate is at 1.80%, compared to 1.80% the previous market day and 2.19% last year. This is lower than the long term average of 3.96%.

The immediate reaction to yesterday's FOMC meeting saw the USD fall sharply against major currency counterparts.

Most notably, spot EUR/USD and GBP/USD pushed back above 1.1303 and 1.4384 respectively.

While, a more cautious tone by Bank of England's policy weighs on sterling.