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U.K. MPC Meeting Minutes Point Out To Further Reductions

Published 12/31/2000, 07:00 PM
Updated 12/17/2008, 05:00 AM

Release Explanation: It's a detailed record of the BOE MPC's most recent meeting, providing in-depth insights into the economic conditions that influenced their vote on where to set interest rates.

Trade Desk Thoughts: The BoE’s minutes from the meeting held at the beginning of December shows that the committee voted unanimously in favor for a 100 basis point rate cut, inline with the expected number. The bank’s view is that the risk of inflation has definitely shifted to the downside, while conditions in the international markets have deteriorated even further. The voting committee sees that the recent development in the U.K. economy has substantially deteriorated since the last meeting, reflecting a sharp monetary contraction. Despite the recent cuts, the bank does not expect to resolve the current problems in the financial markets, suggesting that further easing (rate cuts) may be necessary. In addition, the committee discussed the possibility of cutting more than 100 pips, but the implications for such a strong move were too big. 

Forex Technical Reaction: The cable fell 70 pips in the overnight session. Earlier, in late Asian trading, the pair tried to break above the 1.5700 area, but failed to do so. Against the euro, the pound reached a new all time low overnight.

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