“Sterling falls on this decision while the gilt curve steepens a bit reflecting the higher for longer central bank phrase du jour.”
21 September 2023
After the Federal Reserve alarmed markets yesterday with a hawkish pause in rates, the Bank of England (BoE) today followed suit and did not deliver a dovish hike – one could argue it is all just semantics; both policies are aimed at dampening aggregate demand mostly through the language used that rates will need to stay higher for longer. After yesterday’s softer than expected inflation print it was always possible that the BoE would pause but with wage inflation still running hot, it seems to admit that lagging indicators such as this can be safely ignored. The votes were evenly split with five voting to pause and four voting in favour of a 25 bps hike. Sterling falls on this decision while the gilt curve steepens a bit reflecting the higher for longer central bank phrase du jour.
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The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is not an indicator for the current or future development.