Pound Surges To One Year High After Carney Says He Is "Among Majority" Expecting Tighter Policy

Tyler Durden's picture

Having surged earlier in the day following an unexpectedly hawkish BOE statement, moments ago GBPUSD jumped to fresh session highs after BOE Governor Mark Carney said the pound's decline is boosting prices, and added that he’s among the majority of MPC with view that policy may need to be tightened in coming months.  Some other comments:

  • CARNEY SAYS HE SEES SHIFT IN BALANCING ACT FOR BOE
  • CARNEY SAYS WE WILL TAKE DECISION ON RATES BASED ON DATA
  • CARNEY SAYS POSSIBILITY OF A RATE HIKE HAS DEFINITELY INCREASED
  • CARNEY SAYS TALKING ABOUT A MODEST ADJUSTMENT IN INTEREST RATES

The jawboning, which in typical central banker fashion was not accompanied by any action, sent cable to session highs just shy of 1.3400...

... and the highest since last September.

Adding to the urgency, is a note from Goldman in which the bank has revised its call, and instead of seeking a first rate hike in Q4 2018, Goldman now expects it to take place in November. The full note:

European Views: BoE — on hold, but greater urgency in its tightening bias. We change our call to a November hike

  • The BoE's MPC voted 7-2 to leave Bank Rate unchanged (at 0.25%) at its September policy meeting. Mr McCafferty and Mr Saunders continued to vote for an immediate rate increase.
  • All MPC members agreed that "monetary policy could need to be tightened by a somewhat greater extent over the forecast period than current market expectations". But in a key hawkish development relative to what we expected, "a majority of MPC members" signalled that they have a bias towards tightening policy "over the coming months".
  • The bias to tighten policy in coming months is based on "the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure". It would require some downside news to discourage the MPC from raising rates in coming months.
  • We change our call to expect a 25bp rate rise in November, rather than a first rate rise in 2018Q4. We do not change our fundamental outlook for the UK economy. We view today's communication as hawkish news on the BoE's reaction in the face of a broadly unchanged outlook. After November, we expect the next subsequent rate rise in 2018Q4.

In parting we will just say that the BOE has been here many times before, with Carney warning of imminent rate hikes as far back as 2014. We are still waiting...

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Fake Trump's picture

Don't fuck up Yellen. 

knukles's picture

Why, pray tell, would Mark fuck Janet?
That's a very bad visual

thesonandheir's picture

This guy has never raised a rate in his life.

knukles's picture

Just as a frame of reference.
Immediately after the BREXIT vote, the pound slid to $1.333 and gold traded at $1,333.
Nothing special about the 133333 etc, just sayin' that it was the initial level, an equilibrium for that moment and I'd mentioned that they would likely be revisited on the upside.
The Pound is a much better deal that the Euro and the EU (God help those people) and gold (Of course)

 

buzzsaw99's picture

tighter policy, lulz

man: i'd like a little pussy.

woman: me too, mine's as big as a house.

Soul Glow's picture

The world was going to end when Brexit happened.  Remember?  Oh the humanity!

chicken_goose's picture

Then fucking raise them already you bunch of utter clowns. BoE has fucked up big time, I mean at least the Fed actually managed to raise rates (but only to the emergency lows of the Greenspan era, bless 'em) - these daft bastards at the BoE haven't increased rates in over a full decade now; and their genious response to a cratering pound last year was to actually cut rates again to 0.25% from 0.5%.

Lord Peter Pipsqueak's picture

So he raises rates after threatening to do so many times noone actually believes him any more, so he puts up rates a quarter, that will only reverse the panic cut he made post Brexit - remember it was going to be the end of the world when we voted the "wrong way" and he had to save us(sorry the housing market)?

Goldman predicts next rise won't be until the end of 2018, so what has actually changed people?

Nothing, and yet sterling soars. Just goes to prove there are no markets anymore, just prices determined by central banks.

Everything else is noise.

Doom and Dust's picture

Why do markets pretend to believe this serial liar? They said exactly the same in 2013 ffs.

Something else is going on.

SurlysonofaBitch's picture

MAGA: Make America Get Amnesty :(

U4 eee aaa's picture

Why believe a proven liar who is probably only saying what he is saying to manipulate prices?

FringeImaginigs's picture

Can someone please tell me where the mint is that keeps producing the same Banker year after year.  Same POS each time except just with a different birthday stamped on it.

Cluster_Frak's picture

I see Goldman has issued directives to its agents at cantral banks. First Poloz in Canada, now Carney in UK was ordered to raise. who is next?

Watson's picture

1. Carney would resign rather than raise rates. The UK Finance Minister took away the tax break on buy-to-let, which every UK Joe and his Dog has bought into, so any raise means Carney gets to sort out the resultant implosion.
2. The UK PM is in a quite exceptionally weak position. So if Carney raises rates the UK government will just take rate-setting powers back to itself (and lower them again).
3. Neither Carney, nor any UK Central Bank Governor since 1945, nor any UK Government since 1945, has ever treated inflation as a priority.

For any of these reasons, let alone all of them, UK rates are not going up any time soon.

Watson

OliverAnd's picture

So the rates will increase and the British pound value will also increase as well...  how does that help the common British citizen who is drowning in debt?  Prices for common everyday products will not drop as people have gotten used to the current prices.  In addition mortgage payments will increase for the same amount owed to the bank.  Who wins?  Those with lots of money and the banks.  Who lose? Everybody else.  The same is happening in Canada and every other nation that was a British colony.