EUR/USD
1.17153
0.345%
Gold
4629.19
1.887%
Oil
101.165
-3.983%
USD/JPY
156.333
-2.560%
GBP/USD
1.35297
0.402%
GBP/JPY
211.518
-2.165%
Real-time News
On April 30th, Madison Faller, Global Investment Strategist at JPMorgan Private Bank, stated that the Bank of Englands decision to hold rates steady today was not surprising, but investors should not confuse consensus with confidence. The market may have misinterpreted the balance of risks. Risk is two-way. However, the speed and volatility of the repricing from rate cuts to rate hikes suggest that investors are overestimating the inflationary risks from the energy shock while underestimating the downside risks to growth. We believe that recent movements in UK government bonds (especially in the short to mid-yield curve) and the pound have been somewhat overdone. We believe investors should position themselves now, rather than chasing a hawkish narrative.On April 30th, David Rees, Global Head of Economics at Schroders, stated that the Bank of Englands decision to keep interest rates unchanged reflects its hawkish stance. With overall inflation at 3.3%, wage growth has only gradually slowed, and services inflation remains sticky. The risk lies in the possibility that this shock could become more persistent. A second wave of risk exists later this year if energy shortages translate into food price pressures. Rising fuel and shipping costs, coupled with renewed pressure on inputs such as fertilizers, could lagged behind in pushing up grocery inflation. The risk of persistently high inflation, coupled with speculation about political upheaval following local elections, has pushed UK gilt yields to near 20-year highs. Even so, the threshold for raising interest rates remains high. Given some slack in the labor market and the potential for weaker growth if supply disruptions persist, we doubt the Bank of England will tighten policy unless economic activity remains strong enough to absorb the impact of a rate hike.On April 30th, the Bank of England voted 8-1 to keep the benchmark interest rate at 3.75%. Chief Economist Peale was the only member to vote against it, but other members hinted they might join him at future meetings. Due to the high unpredictability of the Iranian conflict, the Bank of England abandoned its core inflation forecast, instead setting three scenarios based on different paths of energy prices and the effects of a second round of inflation. All three scenarios indicated a need for an interest rate hike: the most pessimistic scenario predicted oil prices would remain around $130 per barrel—a level already reached before Thursdays rate decision. Under this scenario, models used to illustrate the potential impact of monetary policy pointed to a larger rate hike, between 66 and 151 basis points.Bank of England Governor Bailey will hold a monetary policy press conference in ten minutes.Daxin Securities: Raises its target price for Amazon (AMZN.O) from $285 to $310.
