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Carney has to analyze risks to the UK from drought in bond-market liquidity

Mark Carney and his officials must take a close look at the risks posed to the U.K. from a possible drought in bond-market liquidity and report back to Parliament, the chairman of its Treasury committee said, as Bloomberg reports. Andrew Tyrie, a Conservative Party lawmaker, said on Sunday in a letter to the Bank of England governor that he would like a "detailed response" to his query on potential threats posed by a cocktail of future unwinding of stimulus, including quantitative easing, and the effects of rules imposed on banks. Read more...

Sterling higher in a quiet Monday trade

There are no major data releases today, with Sterling slightly higher after large decline on Friday due to NFP figures. Also, markets are being influenced by latest BoE interest rate decision and the following minutes. The Bank froze rates at 0.5% again yesterday with Ian McCafferty the only member of the nine-strong monetary policy committee voting for a hike. It said inflation, running at minus 0.1 per cent, would return to the 2 per cent target ‘in around two years’ if rates rose as expected by markets.
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Sterling down after BoE left interest rates unchanged

Minutes from the Bank of England's most recent policy meeting released Thursday showed that the Monetary Policy Committee voted 8-1 to keep rates on hold. The minutes show eight members were in favor of leaving the key interest rate at a record low of 0.5%, in line with expectations and unchanged from the previous meeting.
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Will BoE rise interest rates?

With no major data releases from the UK traders are focused on rate hike speculations. The CPI print could steady the pessimistic stance, but the question remains as to whether the Fed can achieve levels of inflation close to its 2 per cent target. Sterling suffered a soft finish to 2014 as markets pushed back their expectations for the first interest rate hike at the Bank of England into the end of 2015.
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