October 12th, 2010 09:45:24 GMT

Update: BOE Miles: QE Potent Tool, Data To Determine If Used

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–Adds Comments On Downside Risks To Inflation

DUBLIN (MNI) – Bank of England Monetary Policy Committee Member
David Miles has told an audience here that quantitative easing remains
a ‘powerful tool’ at the Bank’s disposal and ‘one which we may come to
use’.

But he also stressed that making additional asset purchases was not
an ‘obvious’ choice at present.

“I think we’re in a good situation, where even though interest
rates have been effectively cut to zero, our options are not simply how
much do you tighten, I mean, you do have a tool, quantitative easing,
which I think Adam Posen coherently explained remains a powerful tool
and one which we may come to use. I think it’s very helpful that that is
the case,” he said.

Miles said he has yet to make up his mind on whether more QE would
be needed, adding that there is a risk monetary policy could be left too
loose, too long and that any decision on additional asset purchases
would depend on future economic data.

“It’s not obvious what the next direction for monetary policy is.
We face the difficulty of trading off these two big risks and as we get
more information about how things are playing out and where the risks
are moving. I think those are the things that will determine what we
do,” he said.

While Miles said he thought there was a ‘substantial risk’ that
inflation could remain significantly above target, he hinted that he was
more concerned about downside risks to CPI and that he feared tightening
monetary policy could leave the UK with below-target inflation in the
medium-term.

“Maybe even a larger risk is that if we normalise monetary policy
too quickly and knock on the head a recovery that only is only just
embryonic and actually it turns out that inflation pressures, 12-18
months down the road, when the change in VAT has worn off and the
effects of the past depreciation of sterling have fed themselves
through, the risk is we have inflation pressures that sit well-below
target, and that we would have tightened monetary policy too quickly,”
he said.

Miles’ arguments seem to counter those made by MPC Member Andrew
Sentance for an immediate if small hike in rates but do not offer
outright support to those made by Adam Posen for an imminent increase in
QE.

–London Bureau; tel: +44207 862 7492; email: wwilkes@marketnews.com

[TOPICS: M$B$$$,M$$BE$,MSSFX$]

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October 12th, 2010 09:35:41 GMT

ECB Allots E52.236 Bln In 28-Day Refis At Fixed Rate of 1.00%

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FRANKFURT (MNI) – The European Central Bank Tuesday allotted
E52.23607 billion in 28-day refinancing agreements (refis) at a fixed
rate of 1.00% in an effort to improve the overall liquidity position of
the euro area banking system.

The operation, which had no pre-set amount, attracted 34 bidders.
The refis will settle tomorrow and will expire on November, 10.

–Frankfurt bureau. Tel: +49-69-720-142. Email: frankfurt@marketnews.com

[TOPICS: M$X$$$,M$$EC$]

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October 12th, 2010 09:35:40 GMT

ECB Allots E185.984 Bln In 7-Day Funds At Fixed Rate Of 1.0%

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FRANKFURT (MNI) – The European Central Bank on Tuesday allotted
E185.9842 billion in its main seven-day refinancing operation at a fixed
rate of 1.0%.

The ECB satisfied all of the 145 bids received.

Today’s operation resulted in a net drain of E11.0648 billion after
the ECB allotted E197.049 billion in its 7-day MRO last week.

–Frankfurt bureau. Tel: +49-69-720-142. Email: frankfurt@marketnews.com

[TOPICS: M$X$$$,M$$EC$,MGX$$$]

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October 12th, 2010 09:34:18 GMT

I was just reading……

by

Comments from an analyst at a well known US investment bank.

Person in question favours 1.3750/1.4000 range playing out for awhile.  Favours buying dips with a stop under 1.3740, looking for opportunity to sell again towards 1.3950/1.4000.

Looks like a few others of the same mind.  EUR/USD having been as low as 1.3774 back up at 1.3810.

7 Comments

October 12th, 2010 09:25:48 GMT

BOE’s Miles: QE Powerful Tool, Data To Determine Whether Used

by

DUBLIN – Bank of England Monetary Policy Committee member
David Miles has told an audience here that quantitative easing remains
a ‘powerful tool’ at the Bank’s disposal and ‘one which we may come to
use’.

But he also said that making additional asset purchases was not an
‘obvious’ choice at present.

“I think we’re in a good situation, where even though interest
rates have been effectively cut to zero, our options are not simply how
much do you tighten, I mean, you do have a tool, quantitative easing,
which I think Adam Posen coherently explained remains a powerful tool
and one which we may come to use. I think it’s very helpful that that is
the case,” he said.

Miles said he has yet to make up his mind on whether more QE would
be needed, adding that there is a risk monetary policy could be left too
loose, too long and that any decision on additional asset purchases
would depend on future economic data.

“It’s not obvious what the next direction for monetary policy is.
We face the difficulty of trading off these two big risks and as we get
more information about how things are playing out and where the risks
are moving. I think those are the things that will determine what we
do,” he said.

–London Bureau; tel: +44207 862 7492; email: wwilkes@marketnews.com

[TOPICS: M$B$$$,M$$BE$,MSSFX$]

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October 12th, 2010 09:25:45 GMT

CLG: UK Aug House Prices +0.7% M/M; +8.3% Y/Y

by

LONDON (MNI) – UK house prices were 0.7% higher in August from July
and stood 8.3% higher on August 2009, Communities and Local Government
said today.

The comments followed the release of the RICS survey of surveyors’
price expectations overnight which showed falls in prices becoming
more widespread throughout the UK, albeit for September.

While recent surveys of house prices do not provide a uniform
message, they do suggest at the very least that the house market is
becoming somewhat more sluggish following the bounceback from the
price falls seen in 2008-09.

CLG said that house prices rose by 0.8% in the quarter to August
2010 compared to an increase of 1.7% in the May quarter.

–London newsroom: 4420 7862 7499; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDA$,MABDS$,MT$$$$]

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October 12th, 2010 09:25:44 GMT

UK DATA: UK house prices were 0.7% higher in August..

by

UK DATA: UK house prices were 0.7% higher in August from July and stood
8.3% higher on August 2009, Communities and Local Government said today.
The comments followed the release of the RICS survey of surveyors’ price
expectations overnight which showed falls in prices becoming more
widespread throughout the UK, albeit for September.

Comments Off

October 12th, 2010 08:55:04 GMT

UK Data: Exports, Imports Fall In August; Trade Gap Narrows

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–UK Aug Global Goods Trade Deficit Stg8.227bn vs Stg8.675bn Jul
–UK Aug Non-EU Goods Trade Deficit Stg4.694b vs Stg4.706b Jul
–UK Aug Total Trade Deficit Stg8.227b vs Stg8.675b Jul
–UK Aug Global Trade Gap Ex-oil/erratics Stg7.046b vs Stg7.493b Jul
–UK Aug EU-27 Trade Deficit Stg3.533b vs Stg3.969b Jul

LONDON (MNI) – UK trade activity declined markedly in August,
which adds to concerns over the deceleration in the economy in the third
quarter.

Figures released by National Statistics showed total August exports
fell 2.1% on the month and imports fell 2.7% on the month, resulting in
a narrowing of the trade deficit. Goods exports fell 1.8% on the month
and goods imports fell 2.7% on the month.

The total trade gap in August narrowed to Stg4.643 billion from
Stg4.991 billion in July, while the goods trade gap narrowed to Stg8.227
billion from July’s Stg8.675 billion.

The narrowing in both the global goods and total trade gaps was
less than analysts’ had predicted. The median forecast in a Market News
survey for the global goods trade gap was Stg8 billion, and Stg4.1
billion for the total trade gap.

UK exports to the EU picked up in August, but fell sharply outside
the EU. EU exports were up 1.3% on the month, with imports down 1.9%,
while non-EU export fell 4.9% and imports fell 3.5%.

–London newsroom: 44 20 7862 7491; email: drobinson@marketnews.com

[TOPICS: M$BDS$,M$B$$$,MT$$$$,MABDS$]

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