Bank of England

The Bank of England held its benchmark interest rate at the 4 year low of 0.5% as expected. Prior to the announcement out of the 70 economists surveyed all expected for the rate to be left unchanged. The cenral banks asset purchase facility (QE) was also left unchanged at the current total of £375bn. No statement accompanied the release.…

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Uncertainty is something that investors will attempt to avoid at all costs. Political instability, verging on a nuclear war could cause a major shift of assets into safe havens. If the current words escalate, there is a real threat of something far more worrying to occur. North Korea has increased tensions, by threatening the US with a nuclear strike. The US realises that this the state poses potential danger and has deployed a missile launcher in Guam - Guardian More than half of all…

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Dijsselbloem, the Chair of the Eurogroup set the markets into free-fall, after stating that the Cypriot bailout was a “template for other Euro-area bailouts.” This comment of the Cypriot agreement being a precedent for future bailouts sent European bank shares crashing. However over the last 48 hours, hindsight has led to considerable backtracking by EU officials that in fact the Cypriot programme isn’t a template (Bloomberg). The losses the haircut on deposits could…

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The Chancellor of the Exchequer George Osborne is to announce the UK’s budget to Parliament at 12:30 GMT. This is a key date for the markets as rating agencies have identified its importance for the credit rating and outlook for the UK. Sterling has been under considerable pressure since the start of the year with credit rating agency Moody’s downgrading the UK for the first time since 1978 from the top level of AAA to Aa1. Osborne had continually cited the importance of th…

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The Bank of England’s Monetary Policy Committee (MPC) minutes were released this morning and showed that its members voted 6 to 3 against increasing quantitative easing (QE). The current level of the Asset Purchase Facility (AFP) setup in January 2009, is £375bn, with Governor King and two other voting for an increase of £25bn to a total of £400bn of QE. Following the release of the minutes, Sterling rallied as no other members had voted for an increase of QE from its…

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Bank of England Minutes of the Monetary Policy Committee Meeting 6 and 7 March 2013 (Link) http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2013/mpc1303.pdf The above link is to an external website and Abshire-Smith are unable to accept responsibility for its contents.…

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During the early part of the US session yesterday Sterling was bid in FX space, reversing recent declines. Mervyn King current Governor of the Bank of England had a pre-recorded, exclusive interview with ITV News (British News Channel) however the price action indicates that this could have been leaked. King said that the recovery is finally “in sight,” only a short time after he changed his stance and voted for further quantitative easing. In the interview he said that if you re…

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Deputy Governor of the Bank of England Paul Tucker, appearing before the Treasury select committee yesterday mentioned the radical idea of negative interest rates. It seemed more of an idea, rather than the groundwork for future policy, but it highlighted the bank does have other options left to help the economy. The idea is based upon the notion, that banks are currently parking considerable sums on deposit with the central bank for safety, rather than lending to individuals and businesses.…

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There has been speculation for some time that the UK, would lose its coveted AAA credit rating, as the coalition struggles to meet its fiscal targets and growth continues in a “zig zag” fashion as coined by Mervyn King. The downgrade is an embarrassment to the Chancellor George Osborne, as he had said that keeping the top credit rating would be a measure of his and the coalition’s term. This is the first downgrade in the 25 years that Moody’s has been rating debt. Ana…

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Bank of England: MINUTES OF THE MONETARY POLICY COMMITTEE MEETING 6 AND 7 FEBRUARY 2013 Full Bank of England PDF: http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2013/mpc1302.pdf This link is to an external website (www.bankofengland.co.uk) and Abshire-Smith cannot be held responsible for its contents.…

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Yesterday Mark Carney the current Bank of Canada Governor, and future Bank of England Governor took centre stage. The Treasury Select Committee (TSC) immediately began with questions about his remuneration and housing allowance; Carney seemed comfortable, calm and collected. Initially sterling rallied following the release of his written answers to questions he had received prior. Mark Carney hinted towards a change in stance from Mervyn King’s current approach, but was respectful that…

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