FTSE Falling As Bailey Highlights BOE Inflation Concerns
Bailey Admits Mistakes
Bank of England governor Andrew Bailey has come under fire over comments made during a speech yesterday where he admitted that the BOE had made mistakes over its response to rising inflation. The BOE was widely criticised for not acting early or aggressive enough with its monetary tightening. In comments yesterday, Bailey noted that the BOE was dealing with unprecedented circumstances and was still learning how top operate monetary policy in a climate of major shocks.
BOE Highly Concerned Over Inflation
In follow up comments today, Bailey noted that the BOE is highly concerned with inflation and will continue with tightening while inflation remains elevated. On the back of further stickiness in today’s CPI data the market has moved to fully price in a further hike in June with at least one more hike expected beyond that meeting. Bailey has also noted the impact that climate hazards are having on inflation noting that milder weather in the UK had driven up inflation beyond what the bank had expected.
FTSE Falling
UK assets have come under heavy selling pressure amidst these comments and the latest inflation reading. With the BOE widely expected to push ahead with further tightening and risk appetite weaker amidst ongoing debt ceiling uncertainty in the US, the FTSE looks vulnerable to further downside near-term.
Technical Views
FTSE
The reversal lower from highs around the 8000 level has seen the index breaking back below the 7678.8 level. Price is now retesting the broken bear trend line from YTD highs. With momentum studies weak risks are pointed lower, putting focus on 7337.6 as the next support to note.
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