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In case you were too busy telling everyone and their cats that Beyoncé is having twins, you should know that the Bank of England (BOE) has also released its monetary policy decision and quarterly inflation report yesterday.

Oh, and Mark Carney gave a presser, too!

Here are 6 key points you should know about the BOE’s “Super Thursday”:

No changes in monetary policies

Whatever action happened, it didn’t happen because of any monetary policy changes.

  • The BOE’s bank rate is maintained at 0.25%;
  • Purchases of non-financial investment-grade corporate bond purchases still at £10B, and
  • Stocks of U.K. government bond purchases are maintained at £435B.

Monetary stimulus > inflation target

With inflation noticeably shooting higher in the last couple of months, more than a few market players expected the BOE to release the Kraken (a.k.a. higher interest rates) to prevent the economy from overheating.

But job growth won this time, it seems. According to the BOE’s Monetary Policy Committee (MPC), “attempting to offset fully the effect of weaker sterling on inflation would be achievable only at the cost of higher unemployment and, in all likelihood, even weaker income growth.

This is why the BOE would rather “seek to return inflation to the target over a somewhat longer period than usual” and that maintaining its current policies “remained appropriate.”

The BOE was quick to throw in its caveats, though, repeating that “there are limits to the extent that above-target inflation can be tolerated.” However, a closer look at the statement also revealed that, for some members, the latest revisions have moved inflation “a little closer to those limits.” Sorry, Cady Heron. The limit DOES exist.

Adjustments, adjustments everywhere

For the second time in six months, Mark Carney and his gang were forced to significantly upgrade their economic projections after printing gloomy figures on the heels of the EU referendum:

Growth for the U.K. economy was revised higher from 2017 through 2019, with 2017’s 2.0% estimate just under the 2.3% mark that the MPC had predicted before the U.K. voted out of the E.U.

Carney said “sorry not sorry” to its previous forecasts, though, and maintained that the upgraded outlook is the result of (a) fiscal stimulus announced by Chancellor Phillip Hammond in November, (b) faster momentum and better prospects in global activity, (c) higher global equity prices, and (d) the BOE’s August policy changes.

Much like in its GDP forecasts, estimates for employment were also revised significantly higher from 2017 to 2019. Apparently, the MPC now believes that the downside surprises in wage growth figures mean that the sustainable rate of employment is lower than previously thought.

U.K. Unemployment rate
The MPC also cautioned that there remains “considerable uncertainty” around their current employment estimates, as wild card events *cough* Brexit *cough* could still affect labor supply.

Unlike in the indicators above, the BOE isn’t as confident in consumer price growth. See, central bankers still believe that much of the inflation came from the pound’s aggressive drop since the EU referendum.

U.K. Inflation
Higher import prices are expected to push consumer prices above the 2.0% target before it begins to fall back down in 2018. Much of their estimates depend on wage growth, though.

The MPC believes that a pickup in wages could raise domestic inflation in the medium-term, while inflation could fall back below the 2.0% mark if wage growth remains subdued and the impact of a weaker pound fades.

Eyes on consumer spending

So, if the BOE isn’t too worried about inflation, then what are they worried about? Well, it seems like they’re into consumer spending trends these days.

Specifically, the members are expecting consumer spending (and its contribution to the GDP) to take hits as soon as consumers have adjusted to higher prices from a weak pound and continued moderation in pay growth.

Carney noted that the resilience of consumer spending is currently supported by new borrowings and a drawdown in savings and that it could take years for consumers to feel the squeeze. Fortunately, anticipated fiscal stimulus from Theresa May has convinced the MPC to dial down the slowdown it expected back in November.

Carney: Brexit is still a drag

Despite its upgrade in economic projections, the BOE is still decidedly NOT a fan of Brexit.

In his presser, Carney cautioned that “The Brexit journey is really just beginning; while the direction of travel is clear, there will be twists and turns along the way.

He also added that uncertainty over the EU divorce has weighed on future investments, and that, “with time, the UK economy’s supply will be affected by a new set of trading arrangements with the EU and other countries.” However, he also assured that “we can see scenarios in either direction” for policy.

Pound bears attacked

Market players mostly shrugged off the BOE’s economic upgrades in favor of pricing in the BOE’s not-so-hawkish tone.

See, analysts were expecting a hawkish tone to go with the forecasts, but Carney missed the memo and even suggested that we won’t see rate hikes until Gabe releases Half-Life 3. Or until wage growth improves. You know, whichever is sooner.

GBP 15-Minute Forex Charts (Day Open-Close)
GBP 15-Minute Forex Charts (Day Open-Close)

The pound fell across the board, with GBP/USD falling to 1.2525, GBP/JPY hitting a low of 140.78 before recovering to 141.14, and EUR/GBP popping up to a session high of .8625 before easing to .8593.

For now, it seems like the BOE is sticking to script and is mostly shrugging off higher inflation in favor of promoting job creation and faster growth.

If you’re a forex trader, then you should take cues from the BOE and pay closer attention to wage growth and its impact on consumer spending. In fact, it was Carney himself who said that

“If we do see a situation where there is faster growth in wages, or spending doesn’t decelerate, or some combination, one can anticipate that there would be an adjustment in interest rates.”

Stay sharp, fellas!