Action Insight Mid-Day Report 11-12-08
Written by Unknown on 4:28 PM GMT+7Sterling Dives on Dovish King and Inflation Report
Sterling weakens further across the board today after dovish speech from BoE Governor King and the Quarterly Inflation Report from BoE. Sterling dives to new record low of 0.8237 against Euro and six year low against dollar. King said that BoE is "certainly prepared to cut bank rate if that proves to be necessary." Also he noted that RPI will "very likely" turn negative next year. The inflation report said that inflation will fall very quickly in the coming period and drop to "well below" the 2% target in two years time with current rate expectation for a 2% interest rate by mid-2009. Economic outlook has deteriorated sharply. GDP growth is expected to fall from around 4% in Q4 to 2.7% in second half of 2009 before recovering back to 4% by 2011. The evens basically confirm the expectation that further rate cut will be seen from the BoE in near term.
