BoE policymakers stick to quarterly cuts script, GBP eyes CPI
Nov 19 (Reuters) -A gradual approach to rate cuts is the name of the game for the Bank of England - this was the main message from policymakers at the Treasury Select Committee.
The Bank’s newest member, Alan Taylor, highlighted that markets were pricing in around 100bps of cuts by the end of next year, which is in-line with a gradual approach.
For GBP, this brings about little new information and as a result, the currency has been rather muted. However, it is another reminder that sterling should outperform the euro, which is backed by a comparatively more dovish central bank in the ECB, over the longer term.
That said, the key focus for sterling will be Wednesday’s inflation report, with particular emphasis on services CPI, forecast to rise 0.1 percentage point to 5%.
While the data will likely have little bearing on the December meeting, unless of course there is a significant deterioration in services CPI i.e. a 4.6-4.7% print, the data will be more relevant for the 2025 outlook.
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BoE pricing Nov 19 https://tmsnrt.rs/48TqriZ
(Justin McQueen is a Reuters market analyst. The views expressed are his own.)
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