BoE Inflation Report – Back to basics – RBS

By FXstreet.com | Updated August 08, 2014 AAA

FXStreet (Guatemala) - Analysts at RBS explained that the BoE's 'explicit forward guidance' experiment repeated tinkering, awkwardly large forecast revisions and sometimes clumsy communication will probably not go down in history as the Old Lady's finest hour.

Key Quotes:

“It is time to get 'back to basics' by providing a clearer, less convoluted form of policy signalling via a renewed focus on the CPI central projection”.

“This is not to say that the debate about the strong employment-weak wage inflation conundrum (or any other aspect of the economy) is irrelevant. On the contrary, the MPC's assessment of the extent to which structural disinflationary forces are at work in the labour market is crucial – especially in terms of conditioning expectations about 'neutral' or 'terminal' policy rates”.

“Our point is simply that the various 'intermediate thresholds' and estimates of 'medium-term equilibrium' unemployment rates, output gaps etc have not, in practice, provided much useful clarity about the MPC's reaction function. Many of the key inputs into the August forecast – recent trends in GDP, inflation, market interest rates, the exchange rate, oil prices – appear to give the MPC sufficient leeway to delay any Bank Rate hike until into 2015. . . the key question is whether they want to”.

You May Also Like

COMPANIES IN THIS ARTICLE
Related Forex Analysis
  1. Forex News

    Double Top reversal in GBP/USD hourly chart – FXStreet

  2. Forex News

    GBP/USD bullish above 1.5265 – Varengold

  3. Forex News

    GBP/USD consolidates above 20-DMA, awaits fresh incentives

  4. Forex News

    GBP/USD Technical Analysis: Digestion Below 1.53 Continues

  5. Forex News

    GBP: Fed volatility within 50 pip range, scores ground on 1.52 handle

Trading Center