'Super Thursday' is finally upon us, creating a buzz of excitement within the City, but maybe not quite as much excitement as there is at Trent Bridge right now!
Markets have been anticipating the data dump from Threadneedle Street that has seen three significant releases of information in place of just one.
The Bank of England has changed the delivery of the interest rate decision and the minutes of the latest MPC meeting, crucially, including the votes for or against a rate hike. Bringing these two items together in one monthly release, which will also once a quarter coincide with the quarterly inflation report, will give the market a feast of information to digest.
The idea is to make the Central Bank's decision making process more transparent, accountable and predictable, meaning businesses and individuals alike can gain a better understanding of the banks fiscal policy and plan accordingly.
Key points :
Interest rates have been left on hold at 0.5%. This was the expectation of the market, as previous comments from Mark Carney had suggested a rise would come, at the earliest, in the first quarter of 2016.
Despite this, however, the votes of 8 – 1 against a rise from the MPC (Monetary Policy Committee) came as a surprise, with many analysts predicting at least two members to vote in favour of a hike, with Ian McCafferty the only member looking for a tightening in rates.
The minutes of the latest MPC report appear to show consideration of upside inflation risks amongst some members, however, fundamentally still show a split as to when to start removing emergency stimulus.
The quarterly inflation report, released at the same time, showed that the short-term outlook for an increase in inflation was more likely to be gradual. The report cited a decline in global energy prices as the primary reason for this, alongside a stronger pound, something they feel will extend in to the middle of 2016, making the likelihood of a 2015 rate rise less likely.
Additionally, the report showed a decline in price growth, which will average 0.3% this year, down 50% from May, with an expected rise to 1.5% next year.
Having said this, the report was complimentary in its analysis of the UK economy, claiming UK growth will touch 2.8% this year - above the expectation. Further growth of 2.6% is expected next year, alongside a faster rise in wages than initially forecast in May at 3%, which will continue to grow to 3.75% in 2016.
In his statement following these releases, BoE Governor, Mark Carney claimed that any rise in interest rates will be, "data dependent". The MPC will look at a range of factors including, inflation, wage growth and global risk factors before addressing any rate rise, which would likely be, "gradual and limited" in order to align inflation with their target rate of 2%.
He went on to say that the, "slack in the UK economy" is being picked up and despite UK data being very good at present, it is difficult to accurately predict when a rate hike will be, although analysts are already looking towards early 2016.
In conclusion, the Bank of England has offered little change to its rhetoric, with only minor deviation from monetary policy set out back in May.
A rate rise is still on the cards, however, much like its US counterparts, the members of the MPC will only look to tighten rates when the time is absolutely right, taking into consideration a range of factors to form this decision.
The effect on the pound was immediate, with sterling initially losing 0.7% against the dollar and 0.6% against the euro in the wake of there being just one MPC member voting for an interest rate hike. Some of the pound's initial losses have already been reversed as market participants digest the information and support for the pound returns.
Sterling has had a good run of late against the board, but this shows just how much volatility there is amongst the big three (GBP/USD/EUR), and further highlights the importance of taking advantage of key opportunities when and where they present themselves.