Prior to the release of the report by Bank of England there had been some market discussion that the MPC might want to continue the process of signalling to the market that it felt the money market was too flat. Recall that the April MPC minutes highlighted the amazingly flat curve. This was an obvious signal for the market to reprice the projected speed of rate increases and the market duly responded. Thursday morning, the curve was pricing 1.5% by February 2018, steeper than the MPC’s snapshot of the curve in the February Inflation Report and far above the curve at the time of the April MPC comments.
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