Interest rates held by Bank of England

Cornelia Mascio
Giugno 24, 2018

The Bank's all-powerful Monetary Policy Committee (MPC) voted 6-3 to keep rates at 0.5% this month.

Though some policymakers had mooted this before, Thursday marks the first time the Monetary Policy Committee as a whole agreed that 1.5 percent was an appropriate level of Bank Rate at which to consider reversing QE.

Two BoE policymakers, Michael Saunders and Ian McCafferty, whose term ends in August, are widely expected by economists to continue to vote for a rate increase to 0.75 percent, as the pair have done since March.

The interest rate decision comes before Carney gives his penultimate Mansion House speech in the City of London on Thursday night, alongside the chancellor, Philip Hammond, which will be watched closely for clues over the Bank's future policy decisions. Sterling late Wednesday traded at $1.3173.

"Looking further out, two factors will be critical for inflation and hence interest rates".

Hargreaves Lansdown senior economist Ben Brettell was less convinced the Bank was ready to raise rates.

The dollar hovered near an 11-month high against a basket of currencies on Thursday, supported by a rise in USA yields, while the pound was at its lowest level since November 2017 ahead of a Bank of England monetary policy decision.

Household spending and sentiment bounced back strongly, and a sharp fall in factory output in April could reflect firms having built up excess stocks during the period of bad weather in the first quarter of the year, the BoE said.

Mr Haldane was a new addition to the pro-rate hike contingent and this news boosted hopes for an August interest rate hike.

This opens the door for a rate rise at the BoE's next meeting in August, something expected by most economists in a Reuters poll but which recent market pricing viewed as a less than 50 percent probability.

"It's quite a strong signal that they believe now is the now is the time to start thinking about policy normalisation", Jason Simpson, fixed income strategist at Societe Generale, said.

"Sterling jumped after an unexpectedly hawkish vote from the Bank of England points to rates likely rising this summer rather than at the year end", said analyst Neil Wilson. But he did endorse the MPC's new guidance on how long it will wait before reversing past asset purchases.

All members were more confident that the slowdown in GDP growth in the first quarter was temporary, with activity rebounding in the second quarter in line with the BoE's projections.

The BoE said unwinding its balance sheet would take place over "a number of years at a gradual and predictable pace".

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE