Fed Unchanged, BoE Upgraded
Central banks dominated proceedings on Wednesday as the UK Chancellor announced a change to the BoE’s remit, the Fed broadly kept things in check while the BoJ managed to also throw in an update of their own, via news reports, late in the evening session. The BoE’s convergence to the Fed with forward guidance and thresholds did come as a small surprise, but with sterling responding positively in the aftermath, it suggests that many investors were hoping for some more aggression and earlier, rather than August inflation report as reported. The Fed also ensured markets couldn’t entertain expectations of any slowing in stimulus despite firm data of late. Noting that inflation was still expected to stay below target and unemployment at elevated levels, the pace of stimulus was kept on hold and their own growth projections were also unchanged despite a more challenging fiscal environment. Wires also reported the BoJ was planning on ‘bold monetary policy’ in terms of ‘quantity and quality’, and new Governor Kuroda is scheduled to hold a press conference 18:00 Tokyo time (09:00 GMT) to provide details. NZD also outperformed overnight on the back of a strong GDP print. Today markets will again look to Cyprus for updates on the bailout process as the will present a
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UBS Investment Bank