The Bank of England (BoE) is set to leave rates unchanged in its March meeting as core inflation rises – but dissenters may tilt the messages and hit Sterling.
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Bank of England has long list of worries
Jobless claims are up, but so is core inflation – the Bank of England (BoE) faces dilemmas as it meets to announce its rate decision, one day after the Federal Reserve (Fed) calmed markets.
While the "Old Lady" – as the BoE is also called – is projected to leave rates unchanged at 4.50%, its messaging and voting pattern matter.
After a unanimous vote to slash borrowing costs last time, two out of nine members could opt for a rate cut – Kathrine Mann moved to the dovish side, and she is not alone. A 6:3 vote would be a dovish signal, weighing on the Pound. Conversely, an 8:1 split would support Sterling.
The message from BoE Governor Andrew Bailey and his colleagues also matters. Is the bank worried about weak growth and signs of unease in the labor market? That would be dovish, hitting the Pound.
On the other hand, if officials focus on rising wages and urge patience before cutting rates, the currency would benefit.
Similar to the Fed, the BoE is dealing with conflicting signals and extreme uncertainty. That means choppy trading.
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