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BOE’s Mark Carney Makes his Parliamentary Appearance

Posted by WorldWideMarkets . on Sep 12, 2013 3:43:00 AM
Bank of England Governor Mark Carney and three other members of the Bank's Monetary Policy Committee Paul Fisher, David Miles and Ian McCafferty will appear before parliament's Treasury Committee this morning. It was always going to be interesting but after UK unemployment fell unexpectedly and pushed the pound above $1.58 for the first time in eight months of trading on Wednesday, it’s got more interesting. The UK claims count fell by 32,600 compared with the expectation of a drop of 21,200 and the unemployment rate dipped 7.7 percent from the 7.8 percent expected. That quarterly unemployment rate is the lowest in more than a year and another indicator the UK economy is recovering. For Carney, it creates a possible problem. Carney has said the Bank of England would pull its accommodative stance if the unemployment rate dropped to 7 percent. While that goal is still a million jobs away, investors will be watching to see if Carney is less dovish than other recent public appearances. If he remains dovish, expect the pound to sell off. If he gives even a hint that the BOE’s thinking will change expect the pound to rally. The money market shows investors are pricing in BOE tightening perhaps as soon as late 2014, well ahead of Carney and the BOE’s forward guidance. In fact, given tapering is not tightening, that would put it ahead of any tightening by the Fed. Carney has his hands full. trading carney
 

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