British Pound Tumbles on BoE Minutes Consideration of More Stimulus

If expectations for the Fed’s monetary policy decision were low, the prospects for the Band of England’s minutes were non-existent. However, it is when the entire market is caught off-guard that we see the biggest market reactions. In the wrap up to the central bank’s last rate decision, we found a few surprises that were influential enough to send the British pound tumbling. Adding a notable dovish twist to speculators’ already fading hopes for a rate hike sometime this year, the statement noted that some members felt that is was possible that “further asset purchases” may need to be made in the future if conditions warrant. This is far from a commitment; but set against slowing growth, challenges from the EU periphery and downplaying inflation pressures, it douses lingering speculation. We need to keep an eye on market rates to see if they ease.