On June 20, 2007, John Authers, investment editor of the Financial Times, wrote the following in his
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The Bank of England published minutes showing that only the narrowest possible margin, 5–4, voted down [an interest] rate hike last month. Nobody foresaw this. . . . The news took sterling back above $1.99, and to a 15-year high against the yen.
Can you explain the logic of this statement? Interest rates in the United Kingdom had remained unchanged in the weeks since the vote and were still unchanged after the minutes were released. What news was contained in the minutes that caused traders to react? Use the asset approach.
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The news item indicates that investors did not expect the decision to leave interest rates unchange...View the full answer
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Related Book For 
International Economics
ISBN: 978-1429278447
3rd edition
Authors: Robert C. Feenstra, Alan M. Taylor
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