Essential Facts About the BoE Meeting
Professional and experienced Forex traders know the importance of finding out all of the key dates on which important financial news releases are going to be made. There are many websites which now display up to date economic calendars and this makes it simple for investors to find out everything they need to know about the scheduled release dates of such economic data. Being aware of which days these announcements will take place enables them to plan a strategy ahead of time and be prepared for the approach they will take to the market at this volatile trading time. Before and during economic news releases, the markets will always be a lot more volatile than usual, with rapidly moving asset prices, and that situation will continue until the outcome of the release is known and the markets resume a settled position. While the markets are in a volatile state, an investor must make the decision as to whether they will refrain from trading and therefore eliminate the risk of losing their money or instead opt to place a trade in the hope of cashing in on the rapidly moving market and making a larger than expected profit. Using the economic calendar to gain an awareness of these major release dates, such as that of the BoE meeting, is essential for any keen trader as these events have a significant impact upon currency pairs and upon asset prices.
What is the BoE?
The BoE is an abbreviation for the Bank of England, the United Kingdom’s central bank. Occasionally referred to as the “Old lady of Threadneedle Street”, the Bank of England is responsible for promoting the welfare of the United Kingdom’s population by maintaining financial and monetary stability. Although the Bank of England is owned by the British Government, they set monetary policy independent of the nation’s government. Their remit includes management of the Pound Sterling currency and issuing of banknotes within Wales and England as well as monitoring the issuance of banknotes in Northern Ireland and Scotland. They are also responsible for maintaining monetary stability in the country by delivering stable pricing and increasing confidence in the UK currency. The Bank of England’s MPC or Monetary Policy Committee do this through the setting of interest rates. Another responsibility is maintaining financial stability within the UK by ensuring smooth running of banking systems and ensuring that the people are able to put their trust in the UK’s financial institutions.
Who are the Members of the Monetary Policy Committee?
The members of the Bank of England’s Monetary Policy Committee (MPC) meet regularly to discuss the country’s economic outlook and to set the nation’s interest rate in line with meeting the 2% inflation target set by the Government.
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There are 9 members of the Monetary Policy Committee. Of these, 5 are members of the Bank’s staff and include the Governor himself as well as 3 Deputy Governors and the Bank’s Chief Economist. Four of the other members are independent experts who have been selected from outside the Bank specifically for their skills and experience within the field of monetary policy and economics.
The current members of the Monetary Policy Committee are:
- Mark Carney – Governor (appointment term from 1 July 2013 to 30 June 2021)
- Ben Broadbent – Deputy Governor, Monetary Policy (appointment term 1 July 2014 to 30 June 2019)
- Nemat (Minouche) Shafik – Deputy Governor, Markets & Banking (appointment term 1 August 2014 to 31 July 2019)
- Sir Jon Cunliffe – Deputy Governor, Financial Stability (appointment term 1 November 2013 to 31 October 2018)
- Andrew Haldane – Executive Director, Monetary Analysis & Chief Economist (appointment term 1 June 2014 to 31 May 2017)
- Kristin Forbes – External Member (appointment term 1 July 2014 to 30 June 2017)
- Ian McCafferty – External Member (appointment term 1 September 2012 to 31 August 2018)
- Michael Saunders – External Member (appointment term 9 August 2016 to 9 August 2019)
- Dr Gertjan Vlieghe – External Member (appointment term 1 September 2015 to 31 August 2018)
How Often is There a Bank of England Meeting?
Currently there are meetings of the Bank of England Monetary Policy Committee each month of the year in order to set interest rates, however following the meeting held on 15 September 2016 this will change to a programme of 8 meetings per annum following the recommendations made by the Warsh Review. Before every meeting there is an extensive briefing received by the MPC about the state of the economy in the country which has been compiled by the staff of the Bank of England. In order to go through this briefing there is a half day meeting held a week before the BoE meeting itself is scheduled. The Bank of England meeting takes place over 3 days, with the first of the three meetings normally being held on a Thursday before the final decision is taken. During this meeting members of the committee discuss their opinions and interpretations about the recently released economic data. On the second meeting which is generally held on the Monday after this first meeting has taken place, the committee members debate the direction in which they believe policy should go and then at the third and final meeting which is generally on the Wednesday, there will be final discussions followed by a vote on the level of interest rate. The final decision will be published at 12 noon on the Thursday together with the full minutes of the meetings.
When Will the Next BoE Meeting be Held?
Having an awareness of the dates that the BoE meeting will take place is key for serious investors. Here is a schedule of the upcoming Bank of England MPC meetings which are arranged for 2016.
BoE Meeting Dates for 2016
Why is the Bank of England Meeting so Important?
Any trader will admit that their success in the financial markets is often down to the use of fundamental analysis and economic indicators such as the economic calendar. Knowing all of the upcoming dates on which important economic news is going to be released allows forex traders to be aware of likely movements in currency prices and to plan their trading strategy accordingly. The Bank of England meeting dates are some of the most important in the economic calendar as the decisions that are taken at these events will have a major impact upon the UK’s monetary policies and upon the interest rates of the nation. This will have an impact upon the Pound Sterling in the forex market and of course will have a knock on effect on currency pairings around the world. Around the time of the BoE meeting there is certain to be a lot of speculation among interested investors as to the outcome of the MPC’s decision and therefore there will be considerable volatility within the foreign currency exchange market until such time as the final outcome has become known. Knowing the upcoming dates will allow the trader to prepare in advance and to decide whether or not they would prefer to make a trade or alternative to steer clear of the market for a few days.
Advice About the Best Types of Options for Trading the BoE Meeting
Although a significant number of Forex traders prefer not to trade at the time of the BoE meeting date in order to minimise their risk of financial loss, others enjoy the volatility in the market at this time and prefer to take the risk of entering into a position that they hope will bring them a profit. Reversals in price are very common in the climate around a major economic news release such as the BoE meeting and this makes trading the reversal even more dangerous as a strategy than normal. While it is possible to profit successfully in this type of environment, strong risk management skills and money management techniques are especially important in this situation. Anyone who wants to try their hand at this strategy must first identify the levels of support and resistance before the release of the announcement. They should then wait until the data is released and in the immediate aftermath, watch the prices in order to see whether the identified levels of resistance or support come into action. Should this occur, the investor should then watch to obtain a clear idea of whether those levels will continue to hold. The trader will be looking for support coming into the market at a long term level before they take up a long position and place a stop below the support level, however should this occur, they must fit in tightly as then, should the reversal not play out, the position must be taken out as soon as possible. However if the level of support continues to hold, the investor can then start to scale out once the position begins to move in their favour in order to capture as much of the upside as they possibly can.