The new BoE message should lift inflation expectations – BAML

By FXstreet.com | Updated August 15, 2014 AAA

FXStreet (Guatemala) - Analysts at Bank of America Merrill Lynch explained that the sea-change in the perception of the Bank of England's stance was dramatic.



Key Quotes:



“It is hard to know how much was due to new information, an economic model overhaul or a fundamental change in philosophy”.



MPC members, and the market, had played with the notion of a pre-emptive strike against future inflation risk (perhaps steered by the Governor himself) but this Report could well mark a policy realignment to a position closer to the Fed's”.



“If inflation is now something to react to rather than attempt to pre-empt, this should be bullish UK breakevens at cheap levels”.



“5y breakevens of 2.75% are consistent with CPI inflation well-below 2%, allowing for the RPI-CPI wedge, which looks far too low to us”.



You May Also Like

Related Forex Analysis
  1. Forex News

    Weekly Trading Forecast: Will Fed and Greek Elections Keep FX Volatility Boiling

  2. Forex News

    Dollar and S&P 500 Traders Hold Breath for Fed Decision

  3. Forex News

    Cable at A Remarkable Consistent Down Trend Since July of 2014

  4. Forex News

    British Pound Likely to Rally if Critical US FOMC Meeting Disappoints

  5. Forex News

    UK facing key events next week - TDS

Trading Center