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Forward guidance strengthened

BOE
  • The forward guidance language is stronger than previously. It is now: "The scale, pace and timing of any further increases in Bank Rate would reflect the Committee’s assessment of the economic outlook and inflationary pressures. The Committee would be particularly alert to indications of more persistent inflationary pressures, and would if necessary act forcefully in response."
  • Previously it was: "Most members of the Committee judge that some degree of further tightening in monetary policy may still be appropriate in the coming months. There are risks on both sides of that judgement and a range of views among these members on the balance of risks. The MPC will continue to review developments in the light of incoming data and their implications for medium-term inflation."
  • There are a few ways the guidance has been strengthened:
    1. Risks are now seen to the upside
    2. The BOE is opening the door open to 50bp hikes by mentioning the "scale" of hikes
    3. There is no caveat that the guidance is only supported by "some members" (which was 7 members in May)
    4. This part in itself is also particularly hawkish: "would if necessary act forcefully in response."
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  • The forward guidance language is stronger than previously. It is now: "The scale, pace and timing of any further increases in Bank Rate would reflect the Committee’s assessment of the economic outlook and inflationary pressures. The Committee would be particularly alert to indications of more persistent inflationary pressures, and would if necessary act forcefully in response."
  • Previously it was: "Most members of the Committee judge that some degree of further tightening in monetary policy may still be appropriate in the coming months. There are risks on both sides of that judgement and a range of views among these members on the balance of risks. The MPC will continue to review developments in the light of incoming data and their implications for medium-term inflation."
  • There are a few ways the guidance has been strengthened:
    1. Risks are now seen to the upside
    2. The BOE is opening the door open to 50bp hikes by mentioning the "scale" of hikes
    3. There is no caveat that the guidance is only supported by "some members" (which was 7 members in May)
    4. This part in itself is also particularly hawkish: "would if necessary act forcefully in response."