So today, we have some commentary from the Bank of England Monetary Policy Committee which should make for some interesting movements today if last week was anything to go by. Bank of England Governor, Mark Carney, has talked about putting the brakes on near term interest rate rises because we are a ‘mandate run committee that has a firm policy concerning inflation targets’ (and are currently under the 2% inflation target – recently dipping away from this figure).
However, two members of the Monetary Policy Committee have since the last meeting to vote, talked publicly about the need to raise interest rates any way. Member, Martin Weale, said we should ‘look through’ the inflation dip and emphasise the speed of recovery and falling unemployment.
He warned that while it is still very difficult to forecast, employment is gathering steam and as this happens, it puts upwards pressure on wages and subsequently prices too. The market did react to the comments as they were released and so if more of the same is discussed in today’s Monetary Policy Committee comments, then we can expect further jostling.
US inflation results are also out today and, like us, the focus is on interest rate rises with a keen eye on inflation. As inflation rises, so to do the chances of a rate rise for the US – at least in the minds of investors, the actual pressure on Yellen to raise rates is probably different…she can just talk about it and that would probably do the job.
Overall, we have seen a number of peaks and troughs as we have settled against the EUR and USD over the last few weeks. For buyers of the EUR, we still are showing good value, and sellers of USD will be happy at these levels as well. For everybody else, the rate really only goes three ways. UP. DOWN. SIDEWAYS. So, it’s always just a matter of time.