The Bank of England MPC turns hawkish with a 7-2 voting pattern

Mario Blascak, PhD Independent Analyst

The Bank of England keeps May rate hike as probable action while keeping rates on hold in March. The expectations for May rate hike increased after February Inflation Report in which the bank said that “monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period than (previously) anticipated.”

In March the monetary policy stance has been somewhat more hawkish, especially given the policymakers voting pattern turning 7-2 after unanimous voting in the previous meeting. Both Ian McCafferty and Michael Saunders voted in favor of 25 basis points rate hike in March, signalling that the rate hike move is set to materialize soon while the monetary policy statement in March said “ongoing tightening of monetary policy over the forecast period will be appropriate to return inflation sustainably to its target at a more conventional horizon.”

What did Monetary Policy Committee (MPC) say at its meeting ending on 21 March 2018

MPC voted by a majority of 7-2 to maintain Bank Rate at 0.5%.
MPC external policymakers Ian McCafferty and Michael Saunders voted to raise rates to 0.75% returning to their previous hawkishness from 2017.
MPC voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £10 billion.
MPC kept hawkish tilt saying that ongoing tightening of monetary policy over the forecast period will be appropriate to return inflation sustainably to its target.”

In terms of macro picture, MPC acknowledged that

Inflation is expected to ease further in the short term although to remain above the 2% target. Pay growth continued to pick up.
The unemployment rate remained low in the three months to January.
The firming of shorter-term measures of wage growth in recent quarters and a range of survey indicators suggest pay growth will rise further in response to the tightening labor market, providing increased confidence that growth in wages and unit labor costs will pick up to target-consistent rates.

On Brexit, MPC acknowledged little progress

By saying stating boldly that “Brexit remains the most significant source of uncertainty about the economic outlook.”

GBP/USD 1-hour chart

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Bla&scaron;čák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

EUR/USD holds losses near 1.1850 as US, China holidays keep trade muted

EUR/USD opens the week on a softer note, trading near 1.1860 during the Asian session on Monday. Activity is likely to remain muted, with United States markets closed for the Presidents’ Day holiday, while Mainland China is also shut for the week-long Lunar New Year break.

GBP/USD flat lines as traders await key UK macro data and FOMC minutes

The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

Gold remains below $5,050 despite Fed rate cut bets, uncertain geopolitical tensions

Gold edges lower after registering over 2% gains in the previous session, trading around $5,030 per troy ounce during the Asian hours on Monday. However, the non-interest-bearing Gold could further gain ground following softer January Consumer Price Index figures, which reinforced expectations that the Federal Reserve could cut rates later this year.

Top Crypto Losers: Dogecoin, Zcash, Bonk – Meme and Privacy coins under pressure

Meme coins such as Dogecoin and Bonk, alongside the privacy coin Zcash (ZEC), are leading the broader market losses over the last 24 hours. DOGE, ZEC, and BONK ended their three consecutive days of recovery with a sudden decline on Sunday, as crucial resistance levels capped the gains. Technically, the altcoins show downside risk, starting the week under pressure.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.