The BoE decided to keep interest rates unchanged yesterday as was expected, but trimmed its growth and inflation projections, sending the pound tumbling. In the US, data showed that the core CPI failed to accelerate in April as the forecast suggested, prompting investors to reduce somewhat their bets for a 4th Fed hike this year and thereby, sending the dollar lower.
BoE Keeps Interest Rates Unchanged; Downgrades Growth and Inflation Projections
The pound tumbled against all the other G10 currencies on Thursday. The main gainers were AUD, NOK and NZD in that order.
At its “Super Thursday” meeting yesterday, the BoE decided to keep interest rates unchanged at +0.5% via a 7-2 vote as was expected. Once again, the dissenters were the ultra-hawks McCafferty and Saunders. That said, in its Quarterly Inflation Report, the Bank cut its growth forecast for this year, and revised down the whole projected path for inflation.
The downgrades, especially in inflation, may have prompted market participants to...
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