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Every month financial markets anxiously await the most important price – the price of borrowing funds – to be set by central bankers. The day of announcement and previous days of the week might have little to no volatility, for the market players are uncertain of the future decision.
This is apparently not the case for BoE rate decision that is due this Thursday – FTSE 100 closed down 0.69% and was down about 1% intraday, that is unusually high volatility nowadays, albeit trading sessions on Monday and Tuesday were of low volatility. One might rightly assume that relatively high volatility the day before interest rate announcement has some meaning to it. It is viable to suggest that market participants have very little doubts about the outcome of interest rate deliberations by BoE – the interest rate will remain the same as well as hawkish rhetoric, emanating from bank officials.
There is one uncanny caveat in this stance of central bankers – the markets do not longer believe in what is being said, otherwise GBP would not have been in downtrend for almost a month. Only prompt and decisive actions, meant to reduce money supply in economy might make market players change their perception of assertions, coming out of central bank`s offices. Alas, neither of central banks of Europe or North America can raise interest rates without sinking so called “economic recovery”.
This is apparently not the case for BoE rate decision that is due this Thursday – FTSE 100 closed down 0.69% and was down about 1% intraday, that is unusually high volatility nowadays, albeit trading sessions on Monday and Tuesday were of low volatility. One might rightly assume that relatively high volatility the day before interest rate announcement has some meaning to it. It is viable to suggest that market participants have very little doubts about the outcome of interest rate deliberations by BoE – the interest rate will remain the same as well as hawkish rhetoric, emanating from bank officials.
There is one uncanny caveat in this stance of central bankers – the markets do not longer believe in what is being said, otherwise GBP would not have been in downtrend for almost a month. Only prompt and decisive actions, meant to reduce money supply in economy might make market players change their perception of assertions, coming out of central bank`s offices. Alas, neither of central banks of Europe or North America can raise interest rates without sinking so called “economic recovery”.
