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Prospect of a Q1 move by the BoE is still on the table - Commerzbank

FXStreet (Córdoba) - Next week sees the second so-called ‘Super Thursday’, which encompasses a rate decision, MPC minutes and the quarterly Inflation Report. Peter Dixon, analyst at Commerzbank, what markets will be looking for is some indication of when – or indeed if – the BoE is likely to raise interest rates.

Key Quotes

“Against the backdrop of some softness in domestic data, notably BBA mortgage approvals data for September and some evidence that GDP growth has lost momentum of late, markets believe that a Q1 2016 rate hike is a low probability event. There would have to be some very strong words during the press conference – or a major (and unlikely) upward revision to growth and inflation forecasts – to prompt a change of mind”.

“Governor Carney has recently repeated his mantra that a near-term rate hike is not a certainty but that households should be prepared for that eventuality – particularly heavily-indebted mortgage holders”.

“Mr Carney’s comments clearly indicated that the BoE will heavily trail its intentions in advance. But we expect it to hedge its bets next week, even though the Fed’s recent statement keeps the door open to a US rate hike before year end and thus the prospect of a Q1 move by the BoE is still on the table – even if it looks a more remote prospect by the week”.

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