So the head of the Bank of England just decided to have some fun.
Right as the first World Cup match is starting, Mark Carney just fired the ultimate warning.
Here’s the headline that Bloomberg just fired off: CARNEY SAYS BOE COULD RAISE RATE SOONER THAN MARKETS EXPECT.
Here are his exact comments:
The MPC’s current guidance makes clear that we will set monetary policy to meet the inflation target while using up that spare capacity. This has implications for the timing, pace and degree of Bank Rate increases. There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced.
It could happen sooner than markets currently expect. But to be clear, the MPC has no pre-set course. The ultimate decision will be data-driven.
At this point it is safest to conclude, as the MPC has, that there remains scope for spare capacity to be used up before policy is tightened and that a host of labour market, capacity utilization and pricing indicators should be watched closely to determine how that slack is evolving.If there’s one thing that could unnerve the market, it’s the notion of the world’s major central banks actually beginning the tightening cycle in earnest.
Here Mark Carney is suggesting that markets, at least in the UK, are being too complacent about when the party will come to an end.
Although the Fed will do its own thing, it seems plausible that Carney’s comments will concentrate the mind around what will happen stateside.