Bailey speech: Key factors for May rate decision were domestic, not tariffs
Bank of England (BoE) Governor Andrew Bailey is testifying on the May Monetary Policy Report (MPR) before the UK Parliament's Treasury Select Committee (TSC) on Tuesday.
Key quotes
Key factors for May rate decision were domestic, not tariffs.
We have not seen particular inflation surprises.
Labor market has loosened somewhat.
Pay growth is above levels consistent with 2% inflation target but lower than expected in Feb.
Gradual and careful remain my guide for rates.
I will not make any prediction about June rate decision.
Path for rates remains downwards.
How far and how quickly rates will fall is shrouded in a lot more uncertainty.
Uncertainty reflects international situation.
Impact of fragmented global trade is negative for global growth.
Uncertainty will delay the UK businesses' investment decisions.
Impact on prices is ambiguous.
We're not seeing the same impact on supply chains and inflation we did in 2021.
We are most concerned when we see rising US bond yields, a weaker Dollar and falling equity markets US administration has responded in each case.
We haven't seen a serious threat to financial stability so far.
Non-US investors are reassessing their view of the amount of US risk they want to take.
Would be de-stabilising for US Dollar to lose reserve status, I do not see this happening.
Market reaction
At the time of writing, GBP/USD is trading at around 1.3520, down 0.18% on a daily basis.
British Pound PRICE This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.57% | -0.41% | -0.69% | -0.10% | -0.36% | -0.70% | -0.56% | |
| EUR | 0.57% | 0.16% | -0.10% | 0.50% | 0.21% | -0.17% | 0.00% | |
| GBP | 0.41% | -0.16% | -0.25% | 0.31% | 0.05% | -0.33% | -0.15% | |
| JPY | 0.69% | 0.10% | 0.25% | 0.58% | 0.31% | -0.05% | 0.03% | |
| CAD | 0.10% | -0.50% | -0.31% | -0.58% | -0.26% | -0.63% | -0.46% | |
| AUD | 0.36% | -0.21% | -0.05% | -0.31% | 0.26% | -0.31% | -0.12% | |
| NZD | 0.70% | 0.17% | 0.33% | 0.05% | 0.63% | 0.31% | 0.18% | |
| CHF | 0.56% | -0.01% | 0.15% | -0.03% | 0.46% | 0.12% | -0.18% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
