Today is likely to mark the first steps towards the commencement of the interest rate tightening cycle for the Bank of England. The markets can rest assured there won’t be any rate hike at this meeting and in the past we would not know how the MPC had voted for another two weeks, but going forward those minutes and voting patterns will be released along with the decision. Whilst the premise of this change to the BOE’s procedures may have good intentions, it could lead to greater short term volatility both over the release and after it, before investors have enough time to absorb all the information and get a better understanding of what the BOE’s thinking is. Throw into the mix the Inflation Report and sterling could see considerable volatility. This morning sterling is a little higher against the dollar with GBPUSD at 1.5635.
But today’s meeting could be academic as the BOE is highly unlikely to move before the US’s Federal Reserve. Whilst it will be important to see the latest two year inflation projections and decipher whether Mr Carney is edging towards a move hawkish stance, really the bigger question remains if the FOMC will move in September, November or December, with the market pricing in a higher chance of a September rate hike following hawkish comments from Fed voting member Lockhart earlier in the week.