Mark Carney is going off script – Bloomberg

FXStreet Team FXStreet

A Bloomberg article says the economics textbooks prescribe interest rate, but Carney is in no mood to do so and is veering off script.

The article questions whether the BOE’s cautious tone is justified, given the tightening labor market and above target inflation. A combination of strong labor market in the UK, coupled with high inflation warrants a rate hike.

Other advanced economies like US and EZ, the strong job picture isn’t accompanied by high inflation, thus the Fed, ECB and the BOJ could cite low inflation as a reason to hold rates low.

With respect to UK an argument can be made that the above target inflation is largely due to the sharp drop in the GBP exchange rate. Moreover, the BOE could be waiting for signs of wage price inflation before raising rates.

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FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

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