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6 Oct 2015
Major set-backs in Fed and BoE timings - Nomura
FXStreet (Guatemala) - Analysts at Nomura explained their outlooks for both the Fed and BoE in respect to timings of a rate hike from each of them.
Key Quotes:
"Following the non-farm payrolls report on Friday, our US economics team pushed back its expectation for the first hike from December 2015 to March 2016.
The slowing pace of improvement in the labour market means that the high hurdle of evidential proof that a hike can be safely delivered is unlikely to be cleared by December. This reflects onto our BoE call, as we still believe the MPC is wary of hiking until it knows the Fed is too, in case an ongoing rolling back of rate hikes there triggers an unintendedly sharp tightening of monetary conditions through the exchange rate.
Our conviction has thus been in our call that the BoE would not lag the Fed by much, rather than in the absolute start date of the hiking cycle. The UK economic cycle is both more advanced and at odds with monetary policy remaining at an emergency setting, in our view."
Key Quotes:
"Following the non-farm payrolls report on Friday, our US economics team pushed back its expectation for the first hike from December 2015 to March 2016.
The slowing pace of improvement in the labour market means that the high hurdle of evidential proof that a hike can be safely delivered is unlikely to be cleared by December. This reflects onto our BoE call, as we still believe the MPC is wary of hiking until it knows the Fed is too, in case an ongoing rolling back of rate hikes there triggers an unintendedly sharp tightening of monetary conditions through the exchange rate.
Our conviction has thus been in our call that the BoE would not lag the Fed by much, rather than in the absolute start date of the hiking cycle. The UK economic cycle is both more advanced and at odds with monetary policy remaining at an emergency setting, in our view."