FXStreet (Delhi) – Piotr Matys, EM FX Strategist at Rabobank, notes that the BoE Governor Carney yesterday hinted that policy markets may be prepared to increase banks’ capital requirements temporarily as a way to curb excessive lending.
Key Quotes
“While the Bank has been preparing the markets for a potential rate hike in 2016, it adopted a fairly dovish tone in the presentation of the November Inflation Report and downgraded its CPI inflation forecasts.”
“But targeting banks’ capital requirements rather than interest rates to tighten monetary conditions the Bank may be trying to avoid boosting the value of the pound. Today, the UK Chancellor of the Exchequer will present his fiscal spending review. This is against a backdrop of disappointing progress on this year’s deficit reduction targets and an increased focus on counter terrorism.”
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