16 Jun 2014
Follow the leader; Central banks – RBS
FXStreet (Guatemala) - Analysts at RBS noted that there has been a sense of "follow the leader" between the Bank of England and Fed in terms of interest rate guidance.
Key Quotes:
“The BoE followed the Fed to threshold based forward guidance, while the Fed followed the BoE in shifting that guidance to a more open-ended data based guidance”.
“This time, focus is on the FOMC decision and whether Chair Yellen will follow Governor Carney with a hawkish surprise. We do not believe there will be a similar hawkish signal coming from Chair Yellen on Wednesday”.
“Perhaps the key difference between the BoE and the Fed is the stance on the housing market – the BoE is concerned about overheating, the Fed is worried about stagnation in US housing”.
“So we don't expect a similar shift in guidance at the June meeting, though such a change may be more likely in September as the FOMC prepares to update guidance ahead of the official end of the taper”.
Key Quotes:
“The BoE followed the Fed to threshold based forward guidance, while the Fed followed the BoE in shifting that guidance to a more open-ended data based guidance”.
“This time, focus is on the FOMC decision and whether Chair Yellen will follow Governor Carney with a hawkish surprise. We do not believe there will be a similar hawkish signal coming from Chair Yellen on Wednesday”.
“Perhaps the key difference between the BoE and the Fed is the stance on the housing market – the BoE is concerned about overheating, the Fed is worried about stagnation in US housing”.
“So we don't expect a similar shift in guidance at the June meeting, though such a change may be more likely in September as the FOMC prepares to update guidance ahead of the official end of the taper”.