BoE: Carney brought the fireworks to his speech - BBH

Research Team at BBH, notes that the BoE’s Carney brought the fireworks to his speech yesterday. 

Key Quotes

“Rather than offer vague platitudes and promises to stabilize the financial markets, Carney cut straight to the chase and said that the BOE will probably have to ease policy over the summer.  This took two cents off of cable straight away.

Now that Carney has shown his hand, let's look at the calendar.  Next BOE meeting is July 14.  That seems too soon.  After that is August 4, which seems to be the most likely in terms of timing if Carney really is talking about the summer.  After that is September 15, which most would probably say is after the summer (though autumn technically starts on September 22). 

The short sterling futures strip has adjusted accordingly, with implied yields falling across the board.  Sterling has stabilized a bit but continues to trade heavily.  Recall that much of sterling’s outperformance last year was predicated on the BOE being the next major central bank (after the Fed) to tighten policy.  This about-face is likely to continue taking a toll on sterling.”