Transcript of speeches and statements made by members of the Monetary Policy Committee during the meeting dedicated to making a decision on the level interest (accounting) rates of the Bank of England, called "minutes of the Bank of England".
Unlike many other countries in the UK, the decision on monetary policy is made by the government. Therefore, from of the Central Bank only its manager, who holds the post of Chairman of the Committee, is present at the meeting. The increase or decrease in the rate is taken collectively by the composition of economists who do not work at the Bank of England, and officials of relevant ministries.
The UK government has switched to a targeted method of managing the economy – the Regulator's task is to keep inflation at a level close to 2.5% of this indicator for the year. Therefore, all decisions of the Committee should be justified in relation to this task.
Traders and investors study the text of the minutes, analyzing the speech of each of the nine members, comparing the previous position with the current declaration of views.
A change in the Bank of England rate is a rare phenomenon, but it is enough for the markets to get hints of preparing for a change of course to start forming long-term positions.
Since the rate determines the stimulation or tightening of loans, the value of the coupon yield of bonds, then the behavior of the Monetary Policy Committee can predict in advance the strengthening or weakening of the pound sterling.
Bank of England Minutes output frequency and format
The publication of the transcripts of the Monetary Policy Committee meeting falls on Wednesday, about two weeks after the meeting, i.e., monthly.
The impact of statistics on the stock market and Forex currencies
Minutes have a strong, but unpredictable impact on the exchange rate of the pound sterling at the time of publication. The market and analysts pay attention to the transcript during the period of expectations of changes in monetary policy, but they cannot predict the mood of the 9 members.
In the slang of traders, it is customary to distinguish between hawkish and pigeon views, the former characterize votes for a rate increase, the latter advocate for policy easing. Any unanimity or a sharp change of views, a changing balance of votes lead to significant fluctuations in the exchange rate of the pound sterling.
Also, the consistent dynamics of increasing the balance for a specific rate decision can cause medium-and long-term trends, if other factors do not interfere with this (EU policy and Fed).
Investors trading on the stock market pay attention to comments and forecasts on the current and future state of the UK economy. Negative expectations of the Commission members may provoke a drop in the indices, while positive comments and a forecast of improvement in consumer demand will cause stock purchases.