Cable whipsaws just right before the decision but is settling higher now
The BOE offered a nothing-burger to markets as their statement painted the economic view and their next policy stance as being half-full and also half-empty at the same time.
On the one hand, it alleviates fear of any imminent rate cut as we look towards Q1 next year but it doesn't mean that it may not happen. The BOE is essentially on wait-and-see mode and will judge things again next year as they deem it is too soon to do so post-election.
The pound may be getting a slight lift on that but in my view, that is hardly worth chasing in the long-run given that they may just as easily cut rates if things take a turn for the worse in the coming weeks/months.
This to me, was the biggest cue of their indecisiveness (along with the "too soon to judge after the election") as they repeated it from the November monetary policy statement:
Monetary policy could respond in either direction to changes in the economic outlook in order to ensure a sustainable return of inflation to the 2% target. The Committee will, among other factors, continue to monitor closely the responses of companies and households to Brexit developments as well as the prospects for a recovery in global growth. If global growth fails to stabilise or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in UK GDP growth and inflation. Further ahead, provided these risks do not materialise and the economy recovers broadly in line with the MPC's latest projections, some modest tightening of policy, at a gradual pace and to a limited extent, may be needed to maintain inflation sustainably at the target.
Until they settle on giving more subtle clues about leaning towards a rate cut instead, markets will have little to chew on the statement today.
