BOE Preview: June interest rate decision
Current Base Rate: 0.50% Consensus: 0.50% The MPC is expected to keep rates on hold for a third month at its June meeting and adopt a 'wait and see' approach as economic indicators, show some signs of improvement in the economy. It remains a moot point why the BOE chose not to deploy the additional GBP 25bln assigned for quantitative easing (QE) after a dovish May Inflation Report pointed to an uncertain outlook, as well as a 'relatively slow and protracted' recovery. The BOE may have felt
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ECB meeting: Positive signals ignored
- ECB kept the refinancing rate unchanged at 1.0%. We expect the interest rate to be kept on hold for at least a year. - Staff projections for growth were revised downwards – in particular for 2009. The ECB projects the economic decline to be slower for the rest of the year than it was in Q1, but does not see positive growth before mid 2010. We believe this is far too negative. - The purchase of covered bonds for EUR 60bn will be directed towards purchases in both the primary and secondary
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ECB Review: no surprises
As expected, the ECB left all the rates unchanged, with the refi standing at 1.00% , and unveiled the relevant details of the upcoming covered bonds purchase program. The main points of today’s press conference are. On the "traditional" monetary policy front: The ECB confirms that the 1.0% refi rate level is appropriate at this time, but also that it is not a pre-decided floor . We still believe rates will remain at 1.0%, as long as that the ECB’s (and our) baseline scenario holds. Staff
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