Bank of England’s Monetary Policy Committee meeting voted unanimously to keep interest rates and quantitative easing on hold for September.
All nine members of the Monetary Policy Committee are happy with the Bank of England’s current policy stance, with a unanimous vote to keep interest rates at 0.5 percent and the quantitative easing program at £375 billion.
Tiger Legatus Master Fund was up 0.1% net for the second quarter, compared to the MSCI World Index's 7.9% return and the S&P 500's 8.5% gain. For the first half of the year, Tiger Legatus is up 9%, while the MSCI World Index has gained 13.3%, and the S&P has returned 15.3%. Q2 2021 hedge Read More
Sterling Hit Highest Level Since January
Following the upbeat assessment of the UK economy as revealed in the minutes of MPC, Sterling hit its highest level since January, while gilt fell. Sterling moved 0.2 percent higher to peak at $1.5971. Besides this, UK government bonds dropped slightly to leave the 10-year yields at a peak of 3.01 percent.
The nine-member MPC also chose not to repeat July and August, warning that bond market yields were rising faster than the data warranted.
Markets across the world are expecting that the Federal Reserve will announce only a modest reduction in its monthly asset purchases while announcing its monetary policy later Wednesday. According to a forex strategist at Morgan Stanley, with the Federal Reserve missing its growth and inflation targets, one can anticipate ‘tapering lite’ from the FED, indicating a reduction of monthly security purchases by $10 billion to $15 billion.
Bank of England MPC Acknowledges Housing Market Worries
Following the revelation of MPC’s minutes, Societe Generale’s Brian Hilliard in a note highlights the MPC’s worries over the housing market.
Brian Hilliard points out that the MPC noted that property market developments would become more of a concern if a period of rapid real house price increases appeared in prospect. Besides this, the analyst points out the MPC noted the fact that the Financial Policy Committee and the Prudential Regulation Authority now had a range of instruments they could deploy to mitigate this.
Interestingly, MPC’s worries over the housing market echo the recent observations from Barclays’ chief. While speaking at a Barclays PLC (NYSE:BCS) (LON:BARC) conference in New York last week, Barclays’ CEO Antony Jenkins remarked: “We are seeing probably a more buoyant housing market for the first time in perhaps as much as a decade. That’s a bit concerning because there is the risk of a property-driven boom in the U.K. The regulators are on it and don’t intend to let it happen, but these things can be difficult to control.”