BoE King says decision on rates hasn't been decided yet

Today we had the quarterly inflation report from the Bank of England, and stated that there has been no decision on interest rates yet, this lead to a spike up in Gilts and short sterling, and leaved to a 100pip sell off in cable. Short sterling spreads stayed relatively flat, with a small fall in spreads in the front end. Its one of those all up days for stocks and bonds, as Bonds making highs as well as stocks, with the long end getting most of the action as far as the yield curve goes.

Below is an extract from bloomberg on the inflation report;
Bank of England Governor Mervyn King said policy makers haven’t preannounced an interest-rate increase and may need to keep borrowing costs at a record low to aid a recovery that is “unlikely to be smooth.”

“Some people are running ahead of themselves in saying that we are preannouncing, or we’re laying the ground, for a rate rise,” King told reporters in London today. “That decision has not been taken and it won’t be taken until we get to the next meeting, or the following meeting” and “it may be many quarters before we do anything.”

The bank today forecast inflation will quicken from a two- year high and peak at about 4.4 percent before easing to its 2 percent target by the middle of 2012, while the growth outlook has worsened. Britain is about to endure a budget squeeze that will eliminate 330,000 jobs at a time when unemployment is already rising in the aftermath of the recession, a situation that has divided the bank’s policy makers.