Flash: BoE Carney may have disappointed bond market - Danske Bank

Kasper Kirkegaard, Chief Analyst at Danske Bank notes that judging from the market reaction yesterday Mark Carney and the Bank of England did not deliver the dovish message expected by some market participants.

Key Quotes

“The shift away from threshold-based forward guidance to a more qualitative guidance around the level of spare capacity in the economy was met with a significant sell-off led by the 2-3Y segment
of the 1Y forward curve.”

“With the updated guidance being less clear and simple, uncertainty about the MPC reaction function could suggest some more risk premium weighing on the front of the UK curve.”