While there was a unanimous vote for no-change, the British Monetary Policy Committee did open the door for a rate hike in 2014. However, they also said a few dovish things and they remain cautious. They say that more slack needs to be absorbed before rate hike increase. But, MPC Members “Surprised” By Low Probability Attached By Investors To 2014 Rate Move. They say that the policy decision was more balanced for some members. It would be difficult to reverse the first hike, say the minutes. The BOE also says that the recovery has broadened and has become more sustainable. They do see upside risk to Q3 GDP.
After Carney’s rate hike comment, there was speculation that perhaps one or more member had already voted for a rate hike in June.
GBP/USD was sliding within the range, and traded around 1.6960 just before the release. — updates coming
Here is a breakdown of the hawkish and dovish comments from the minutes:
Hawkish:
- BOE surprised by low probability attached to 2014 rate rise.
- Recovery has broadened and become more sustainable
- Growth could be stronger in H2.
- More balanced decision for some members.
Dovish:
- Unanimous vote
- Slack and wages need to improve
- Mitigation of housing risk best addressed by FPC.
- Rate rise will be gradual and will not reach pre-crisis average.
- First rate hike cannot be reversed, must weigh cost of premature rate rise.
Cable is shaking in a 50+ range, between just under 1.6950 and just above 1.70. The immediate move was a fall, then a rise above 1.70 and now a new slide.
Support awaits at 1.6940. Resistance at 1.7011. For more, see the GBPUSD forecast.
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