State Street : Reacts to Bank of England’s Interest Rate Decision

LONDON and BOSTON - July 14, 2016 - In light of today's interest rate decision from the Bank of England Michael Metcalfe, head of Global Macro Strategy, State Street Global Markets and Bill Street, head of Investments EMEA, State Street Global Advisors offer the following views.

Michael Metcalfe: 'There are two surprises here. The first is that interest rate markets had forecast more than a 70 percent chance of a cut. But the bigger surprise is the second one, namely that the Bank of England was ready to disappoint market expectations so soon after the Brexit vote. While a rate cut can still come at the next meeting, the delay hints at concern about the inflationary impact of sterling weakness and some uncertainty as to how rapidly the economy will actually slow.'Bill Street: 'Although the Monetary Policy Committee (MPC) surprised many by remaining on hold, we still expect an easing of policy in the near future. The next MPC meeting will coincide with the publication of the latest Inflation Report, providing an ideal opportunity for the Bank to respond to the Brexit vote. We expect at least a rate cut on 4 August, with the MPC also considering other tools including a fresh round of quantitative easing.'About State Street
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