FOREX: JPY Slippage Stands Out as Equity Bounce Holds

The Yen is printing further broader base lows, the Scandis are still leading against the Yen in G10, but AUDJPY is now also breaking above Friday's high, although initial resistance is seen at 96.02, now trading at 95.65.

• However, it was also qualified that Mann thought that the 50bp cut was appropriate at “this meeting” – indicating that she may not repeat a vote for the same magnitude of cut at future meetings. The full part of this passage in the Minutes noted that “a more activist approach at this meeting would give a clearer signal of financial conditions appropriate for the United Kingdom.”
• The wider MPC updated its estimates for the neutral rate (model-based estimates suggest 2.25-3.75%) but it is not clear exactly where Mann believes the neutral rate will be and whether she fully endorses this range. If she does, after last week's cut we are only 75bp away from rates potentially not being restrictive any more.
• She is due to deliver a speech entitled “Economic Prospects” at Leeds Beckett University tomorrow at 8:45GMT and we will be watching this closely for any hints surrounding her voting intentions past the next couple of meetings.
• There is a link to register for virtual tickets for the speech here.
• For more on our interpretation of last week's BOE meeting, see our BOE review here.

• Catherine Mann has long presented herself as having an “activist” rather than hawkish stance. Through the hiking cycle she dissented in favour of larger hikes in 6 of the 14 meetings through which Bank Rate was increased. Throughout this time she noted that she favoured front loading hikes and then when the facts changed to also then opt for a faster cutting cycle.
• She then voted four times while Bank Rate was maintained at 5.25% in favour of further hikes (never subscribing to the wider MPC’s “Table Mountain” view) and only moved away from voting for hikes in March 2024. She also dissented against the rate cuts delivered in August and November.
• We would be very surprised if Mann did not follow up her dovish dissent (50bp vote for a cut last week) by voting for more cuts at least in March and May but we aren’t quite sure how far she will want to cut Bank Rate as it was noted in the Minutes that she thought that “monetary policy would need to remain restrictive for some time to anchor inflation expectations, and Bank Rate would likely stay high given structural persistence and macroeconomic volatility.”