Bad News

You know what I was saying yesterday about the Bank of England losing its nerve?

The minutes to the latest Bank of England meeting are out and the big news is that Adam Posen — a well-known dovish member of the board and frequent add advocate of more easing — does not currently support more QE.

The pound just instantly skyrocketed.

chart

Eep. Higher pound, tighter policy. Scarily the Bank didn’t even need to change interest rates to tighten policy, somebody just stopped saying something.

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6 thoughts on “Bad News

  1. Thanks, I saw about the Canadian chap, the Canadians did better than us by every metric recession/recovery wise, so I’m very supportive.

    Also Canadians are cool in general.

  2. Painful :(. The reactions in the forex market to unexpected small changes to the MPC voting pattern make a mockery of the claim that the BoE is powerless at the zero bound. Same reaction the other way when QE in October was larger than the markets expected.

    @bondvigilantes made the point that Sterling appreciation this year has been equivalent to a 50bp rise in Bank Rate. Very bad indeed. But hey, it’ll get inflation down. Right?

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