British Pound Profile (Part II)
The Chancellor of the Exchequer still determines the inflation target for the economy. The monetary policy is dictated by the inflation target set by the Treasury Chancellor despite the independence of the Bank of England (BOE). BOE has the power to change interest rates to levels that it believes will allow it to meet this target.
MPC meetings are held on a monthly basis and are closely followed by changes in the monetary policy including changes in the interest rates. The Monetary Policy Committee (MPC) meetings are closely followed by the professional forex traders all over the world as GBP is a highly popular currency among the traders.
MPC issues statements after each meeting. A Quarterly Inflation Report detailing the MPCs forecasts for the next two years of growth and inflation and its justification for its policy movements is also published.
BOE issues a number of more reports that are frequently used by market analyst to form their bias about GBP. The Quarterly Bulletin is another publication. It provides information for the past monetary policy movements and analysis of international economic scene and its impact on the British economy. All of these reports are highly informative for professional forex traders who trade GBP heavily.
The main policy tools used by MPC and BOE are the Bank Repo Rate and the Open Market Operations. Bank repo rate is the key rate used in the monetary policy to achieve the Treasurys target inflation rate.
Bank repo rate is the short term interest rate that eventually sets in motions changes in the other short term and long term interest rates in the market. However, there is always a time lag between the policy announcement and the anticipated change in the market interest rates. It maybe a few months to a year! Changes to the bank repo rate affect the commercial banks interest rates for its savers and borrowers. Bank repo rate is set by the BOE for its own operations in the market such as the short term lending activities.
In turn these commercial interest rates will affect spending and output in the economy and eventually the costs and prices. An increase in the Bank Repo Rate means BOE wants to curb the inflation. A decrease would be to stimulate growth and expansion.
Open market operations means buying or selling of government securities in the open market. Open market operations are done by the BOE to achieve its targeted bank rep rate. While assuring adequate liquidity in the market and continued stability in the banking system, the goal of the open market operations is to implement the changes in the bank repo rate.
The three main objective of the BOE are to maintain the integrity and value of GBP, maintain the stability of the financial system and seeking to ensure the effectiveness of the UK financial services.
These objectives are met through the open market operations. BOE daily conducts open market operations to buy or sell short term fixed income government instruments in order to ensure liquidity in the economy. If this is not sufficient to meet the liquidity needs, BOE can conduct additional overnight operations as well. The United Kingdom is a pivotal nation because it bridges the economical, geographical, and ideological divide between the United States and Europe.
The GBP can be affected more directly by oil prices than other currencies as the United Kingdom is an oil producer. The relationship between oil and the pound is fading, however, because production in the United Kingdoms North Sea oil fields is steadily decreasing. - 23167
MPC meetings are held on a monthly basis and are closely followed by changes in the monetary policy including changes in the interest rates. The Monetary Policy Committee (MPC) meetings are closely followed by the professional forex traders all over the world as GBP is a highly popular currency among the traders.
MPC issues statements after each meeting. A Quarterly Inflation Report detailing the MPCs forecasts for the next two years of growth and inflation and its justification for its policy movements is also published.
BOE issues a number of more reports that are frequently used by market analyst to form their bias about GBP. The Quarterly Bulletin is another publication. It provides information for the past monetary policy movements and analysis of international economic scene and its impact on the British economy. All of these reports are highly informative for professional forex traders who trade GBP heavily.
The main policy tools used by MPC and BOE are the Bank Repo Rate and the Open Market Operations. Bank repo rate is the key rate used in the monetary policy to achieve the Treasurys target inflation rate.
Bank repo rate is the short term interest rate that eventually sets in motions changes in the other short term and long term interest rates in the market. However, there is always a time lag between the policy announcement and the anticipated change in the market interest rates. It maybe a few months to a year! Changes to the bank repo rate affect the commercial banks interest rates for its savers and borrowers. Bank repo rate is set by the BOE for its own operations in the market such as the short term lending activities.
In turn these commercial interest rates will affect spending and output in the economy and eventually the costs and prices. An increase in the Bank Repo Rate means BOE wants to curb the inflation. A decrease would be to stimulate growth and expansion.
Open market operations means buying or selling of government securities in the open market. Open market operations are done by the BOE to achieve its targeted bank rep rate. While assuring adequate liquidity in the market and continued stability in the banking system, the goal of the open market operations is to implement the changes in the bank repo rate.
The three main objective of the BOE are to maintain the integrity and value of GBP, maintain the stability of the financial system and seeking to ensure the effectiveness of the UK financial services.
These objectives are met through the open market operations. BOE daily conducts open market operations to buy or sell short term fixed income government instruments in order to ensure liquidity in the economy. If this is not sufficient to meet the liquidity needs, BOE can conduct additional overnight operations as well. The United Kingdom is a pivotal nation because it bridges the economical, geographical, and ideological divide between the United States and Europe.
The GBP can be affected more directly by oil prices than other currencies as the United Kingdom is an oil producer. The relationship between oil and the pound is fading, however, because production in the United Kingdoms North Sea oil fields is steadily decreasing. - 23167
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Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try 1500 Pips a day Forex Signals. Discover a revolutionary Forex Robot Trading System!
posted by X - Men @ 7:10 AM
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