More on BoE, apart from Saunders and McCafferty, there seems to be nothing worth noting in today’s announcement. Overall tone of the statement remained the same as February’s. Brexit development was just briefly mentioned. The essential part regarding Brexit was totally unchanged.
BoE maintained that the projected 1.75% GDP growth would be more than offset 1.5% supply growth. And small margin of excess demand was projected to emerge by early 2020. And that would push up domestic costs. Thus, “inflation remained above the 2% target in the second and third years of the MPC’s central projection.”
BoE added that “ongoing tightening of monetary policy over the forecast period will be appropriate to return inflation sustainably to its target at a more conventional horizon.” This suggests that it’s more confident regarding tightening ahead. But BoE reiterated cautious that “any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.
Overall, the lack of acknowledge of Brexit negotiation progress, and the cautious tone of the statement is holding back Sterling bulls.
