On Wednesday two-year yields ended the day within a whisker of their highest level since 2011 as markets priced in tighter global interest rates ahead of a U.S. Federal Reserve rate rise.
In addition, the MPC agreed to maintain the stock of United Kingdom government bond purchases, which are also financed by the issuance of central bank reserves, at £435bn.
"With another hike in interest rates in May now largely priced into markets (and supported by this week's Monetary Policy Committee (MPC) Minutes), the bigger question is just how "limited and gradual" the rise in interest rates will be thereafter", says Paul Hollingsworth, a senior United Kingdom economist at Capital Economics.
The Bank of England's meeting later on Thursday is now in focus, with market participants keeping a close eye on the central bank's policy views after robust British wage data cemented expectations that the central bank will raise rates as early as May.
Some investors were more equivocal.
Wednesday's major United Kingdom data covered the unemployment rate and changes to average earnings in January.
Comments from Vlieghe and talk on transition follow Thursday's Bank of England monetary policy decision, which was seen as providing confirmation that it will raise interest rates for a second time in May but lacking any meaningful signals of what might come after that. US President Donald Trump's plans to impose tariffs have sparked concern that a trade war may ensue.
But there was nothing to suggest policymakers are looking any less closely at raising rates in May.
The Bank of England said this had given a boost to sterling. The MPC is keen to return to something resembling conventional monetary policy conditions before any "hit" - the transition period gives them time to achieve this, and to achieve it gradually.
"It is very hard to read into these minutes any clues that the MPC is trying to downplay a May rate hike", he said.Читайте также: US, China pick trade weapons
Bank governor Mark Carney has already warned that rates will need to rise "somewhat earlier and by a somewhat greater degree" to get inflation back to target.
The BoE's key interest rate has remained unchanged since November when it was raised for the first time in more than a decade.
"We still think that the MPC will hike interest rates in May", Paul Hollingsworth, senior United Kingdom economist at Capital Economics, said following Thursday's announcement.
Regarding Brexit, the minutes said that "developments regarding the United Kingdom´s withdrawal from the European Union - and in particular the reaction of households, businesses and asset prices to them - remain the most significant influence on, and source of uncertainty about, the economic outlook". Pay growth continued to pick up. The BoE said that underscored how domestic cost pressures were building. The BoE expects growth of 1.8 percent this year and next, well below the historic average.При любом использовании материалов сайта и дочерних проектов, гиперссылка на обязательна.
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