Hawkish BoE followed by uneventful ECB

1 min read

By Craig Erlam  

The Bank of England and the European Central Bank both left rates on hold on Thursday, but unlike following the announcement of their counterparts in the US, there were no fireworks.

Of course, the press conference is yet to take place, so fireworks may fly when President Lagarde speaks, but the announcement and statements that followed didn’t give investors much to get excited about.

The one point of note was the reference to inflation projections being lower than in September “especially for 2024”, which may be a precursor to Christine Lagarde insinuating then the next move could be lower in the new year.

How early may determine whether markets are forced to pare back very aggressive positioning.

The Bank of England announcement was arguably more notable, despite offering no forecasts and there being no press conference after.

The voting was unchanged from the last meeting, with three policymakers backing a rate hike, very much running counter to the message from the Fed on Wednesday night.

Perhaps armed with new projections in February, the message from the BoE will be very different, but at this moment, that was rather more hawkish than many will have expected.

And the statement still referencing higher for an extended period and higher inflation compared with other major advanced economies was clearly more hawkish. ​ ​

Craig Erlam is Senior Market Analyst, UK & EMEA at OANDA

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