Bank of England reduces rates again, Sterling Falls

The bank of England reduced interest rates in a quarter of a percentage point on Thursday, judge a strong revision of its inflation forecasts for this year will be temporary.

The 4.5% cut was in line with the expectations of economists in a Reuters survey, but two officials asked for a higher rate cut in a weaker growth context.

Sterling fell to $ 1,2370, from $ 1,2425 just before the decision and fell more than 1% in the day. The Libra also weakened against the euro until the last trade around 83.74 Penshirts compared to 83.40 Penshirts before.

The yields of the United Kingdom government bonds fell, with the yields of two years at the end of 6 basic points in 4.08% versus 4.13% just before the rate of rate.

The London FTSE 250 Stock Index, the MID CAP FTSE 250 stock rate accelerated its profits and lasted more than 1.5% each.

Comments:
Zara Nokes, Global Market Analyst, JP Morgan Asset Management, London:
“With the softer inflation impression of December than expected that had fed market expectations for a cut, the Bank of England probably felt that it had no choice today. The distribution of votes showed a high conviction in the call , but this approach is not exempt from risk.

“While economic activity is clearly slowed, inflation pressures are not. Inflation expectations have been acquired as a result of the highest energy prices, strong salary growth and companies that indicate that they intend to charge higher prices in response to the October increase.

“The growth perspective cannot be as bad as commercial surveys suggest, with the large increase in public services spending announced in the autumn budget that will probably provide a tail wind this year, compensating part of the weakness of the private sector. In this context, the bank must be resolved in its commitment to return inflation to the objective.

“Rate cuts can be popular in the short term, but, ultimately, there will be a higher price to pay later if inflation is not stamped now.”

ZSOLT KOHALMI, CEO ATTACHING AND GLOBAL HEAD OF RAÍCES, PICTET ALTERNATIVE ADVISORS, LONDRES:
“Interest rates are crucial for the history of real estate recovery. The rates of the United Kingdom are currently among the US, which are higher, and continental Europe, which are lower.
“However, for a recovery in the real estate market of the United Kingdom, however, the United Kingdom rates must decrease significantly and be closer to the perspective of the European rate curve, instead of the US , this is far from safe, but there would be an advantage for investors in real estate in the United Kingdom. “

Michael Field, Chief European strategist, Morning Star, Amsterdam:
“With plenty for trade in general. ”