BOE Carney:Investment Restrained By Brexit Uncertainty

by | February 8th, 2018, 12:34:06 | BOE, Central Banks

Mark Carney

BOE Mark Carney press conference 08.02.2018

  • UK exporters are in a sweet spot with softer GBP currency and Brexit not yet happened  
  • Demand growth to exceed supply growth
  • Wage growth to increase due to Labour market tightening
  • Inflation could exceed 3% in the short term mainly due to energy prices
  • UK investment in its shallowest recovery in 50 years –
  • Supply capacity to grow only modestly
  • UK economy broadly in line with forecasts
  • Any rate hike will be gradual but they “could” be sooner
  • BOE will not be tied by any specific rate path
  • Not talking about pre-crisis level rates
  • Timing of the next hike will depend on economic data
  • BOE language is similar but not the same as in September …
  • Economy cannot grow as fast as it used to without generation inflationary pressures
  • Brexit deal will have major consequences for the economy
  • Confident that BOE will be a lot better informed on Brexit prospects by end of the year
  • BOE will be able to adjust policy as appropriate if there is greater Brexit uncertainty
  • Market volatility was extremely low before this, and it is healthier when markets have two-way risk around prices

GBP responded in some fashion to the sooner rate hike expectations. May expectations are now closer to 75% .
We broke above 1.4006 , the 38.2% fibs of the early Feb decline to reach 1.4030s . A small pause could be built in now but I expect high 1.39s to hold retracements.

K-man
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