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Bank of England pulls back from rate hikes

Jan. 21, 2015 10:33 AM ETEWU, FXB, EWUS, FKU, DXPS, DBUK, QGBRBy: Stephen Alpher, SA News Editor
  • Two BOE policy makers had been voting for rate hikes since August, but backed down from that stance at the last meeting (early January), according to the minutes.
  • It wasn't long ago investors were pricing in a U.K. rate hike in late 2014, but now markets have backed off all the way to Q2 of 2016. At issue now are the downside risks to inflation after the rate fell to just 0.5% in December vs. the bank target of 2%. Behind that drop, however, is oil, whose decline could actually boost the medium-term risks for higher inflation, says the BOE.
  • The pound (NYSEARCA:FXB) is lower by 0.2% at $1.5111, and the FTSE (NYSEARCA:EWU) is Europe's big gainer today, up 0.8%.
  • ETFs: EWU, EWUS, FKU, DXPS, DBUK, QGBR
  • Previously: Unexpected rate cut for Canada (Jan. 21)
  • Interesting times: Canada unexpectedly cuts rates, the BOE is postponing rate hikes, and the ECB is set to launch QE, but the Fed seems heck-bent for tightening policy by mid-year.

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