empty
23.09.2021 03:35 PM
Bank of England to raise interest rate

The Bank of England said the urgency of tightening the UK monetary policy is under consideration and inflation could exceed 4,0%, prompting investors to bet on an interest rate hike.

While the Bank of England maintained extremely soft monetary policy parameters in line with economists' forecasts, officials changed their forecasts. Deputy Governor Dave Ramsden joined Michael Saunders in insisting that the bond purchases had to be halted as soon as possible.

Noting the "modest tightening" of monetary policy forecasted for August "some developments during the intervening period appear to have strengthened that case, although considerable uncertainties remain," the bank stated in its monetary policy summary.

Financial markets placed bets on an interest rate hike before February, while the pound strengthened as investors reacted to a decision that places the Bank of England in the hawkish camp of developed country central banks during a crucial week. On Wednesday, the US Federal Reserve announced that officials may soon cut bond purchases, and Norges Bank raised its interest rate on Thursday.

The UK central bank is trying to curb inflation, which accelerated over the summer while significantly exceeding forecasts and reached 3.2% in August. The stronger-than-expected jobs data facilitated the new policy, which shows that peak unemployment will be well below the worst-case scenario projected at the start of the pandemic.

According to Luke Bartholomew, an economist at Aberdeen Standard Investments, the impending end of layoffs is a major source of uncertainty which the economy faces, but at this point, the bank seems relatively confident that the economy can handle this shock without a significant increase in unemployment.

Traders are now assuming a 15 basis point rate hike in February compared to the rate in May. The pound rose by 0.6%, while 10-year bond yields increased the most in a week.

The Bank of England kept its interest rate unchanged at a record low of 0.1%, while its asset purchases will reach 895 billion pounds ($1.2 trillion) by the end of this year. Governor Andrew Bailey and policymakers unanimously agreed that any future policy tightening should begin with an interest rate increase.

Ramsden joined Saunders in voting to stop the current asset purchase program as soon as practical, which was an unexpected change that would reinforce the assumption that the Bank of England had changed altered its viewpoint.

"There was increasing evidence from a range of global and domestic cost and price indicators that inflationary pressures were likely to persist," the bank stated in the minutes, adding that "these members judged that, with the existing policy stance, inflation was likely to remain above the 2% target in the medium term."

The decision was also notable for the participation of two new MPC members: Huw Pill, former Goldman Sachs Group Inc. analyst who replaced Andy Haldane as chief economist, and Catherine Mann, former OECD chief economist. Both of them voted with the majority on this issue.

This image is no longer relevant

The Bank of England forecasts inflation at 2.0% but it may temporarily double that level in the last three months of the year, slightly more than in August, officials said. "The material rise in spot and forward wholesale gas prices since the August Report represented an upside risk to the MPC's inflation projection from April 2022, and meant that CPI inflation could remain above 4% into 2022 Q2," the MPC added.

Along with the MPC meeting results, the Bank of England released an exchange of letters between Bailey and Chancellor of the Exchequer Rishi Sunak to note a spike in inflation above the institution's allowable 3%.

"Most indicators of cost pressures have remained elevated," Bailey wrote. "That said, it appears that supply conditions in the global semiconductors sector have improved slightly, although it will take some time for previous order backlogs to clear."

While the Bank of England's more hawkish rhetoric follows a notable surge in inflation, it also comes amid an economic recovery that has shown signs of weakening amid supply and labor shortages.

Thursday's data showed that about 5.8% of workers in the UK were laid off earlier this month, even though that support program expires September 30. September is also the weakest month for private sector activity.

Egor Danilov,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Egor Danilov
Start trade
通过InstaForex赚取加密货币汇率变动的收益。
下载MetaTrader 4并开启您的第一笔交易。
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

推荐文章

2025年7月17日美國市場新聞摘要

在有關傑羅姆·鮑威爾可能辭去聯邦儲備委員會主席職務的揣測推動下,美國股市指數當日收盤適度上漲,引發了市場的短期波動。投資者對於貨幣政策可能出現的變化感到擔憂,尤其是在不穩定的通脹動態之下。

Ekaterina Kiseleva 12:36 2025-07-17 UTC+2

鮑威爾辭職?市場回升,納斯達克創下新高紀錄

美國股市週三收盤時取得小幅增長,未被因報導唐納德·特朗普總統考慮解僱美聯儲主席鮑威爾而引發的市場波動所撼動。在表現出韌性後,科技股佔優勢的那斯達克綜合指數再創新高。

Thomas Frank 11:14 2025-07-17 UTC+2

納斯達克衝高:Nvidia 飛漲,Citigroup 收盤創 2008 年高點

週二,納斯達克綜合指數再創新高,主要受到Nvidia股價飆升的推動。與此同時,其他主要華爾街指數下跌,因投資者對最新的通脹報告和銀行業盈利報告熱情不高。

Thomas Frank 08:02 2025-07-16 UTC+2

7月15日美國市場新聞摘要

Gilead Sciences 的股票在從支撐線強勢反彈後,顯示出增長的跡象,預計將上升至 3 月 10 日的高點 119.89。 與此同時,百度持續下跌,為對沖提供了有利條件。

Ekaterina Kiseleva 14:16 2025-07-15 UTC+2

比特幣突破12萬美元,納斯達克創新高:市場渴望更多動力

美國股市週一以小幅上漲收盤,因投資者對唐納德·特朗普總統最新的貿易威脅採取謹慎而非行動。本週將是繁忙的一週,包含豐富的經濟數據以及財報季的開始,因此市場保持相對穩定。

Thomas Frank 10:18 2025-07-15 UTC+2

市場緊張:特朗普瞄準歐盟,關注通脹和中國數據

在亞洲市場週一全面下滑後,華爾街和歐洲股票指數週初也出現下跌。投資者對美國最新一輪的貿易戰言論作出反應,儘管許多人認為這可能只是施壓策略而非堅定承諾。

14:48 2025-07-14 UTC+2

美國市場新聞摘要 - 7月14日

Donald Trump 宣布對來自歐盟和墨西哥的商品徵收30%的關稅。市場初步反應消極,但S&P 500指數在大型股的助漲下部分反彈。

Ekaterina Kiseleva 14:36 2025-07-14 UTC+2

市場緊張:特朗普對歐盟、通脹和中國數據即將公佈

週一的亞洲交易時段,華爾街期貨和歐洲股市下滑,因投資者對美國重新威脅徵收關稅作出反應。儘管語氣強硬,許多人仍認為特朗普總統的言論可能僅限於空話。

Thomas Frank 10:40 2025-07-14 UTC+2

股票熱潮:Nvidia 突破4萬億,Bitcoin也不甘示弱,道瓊與標普上漲

美國股市指數週四小幅上漲,S&P 500及納斯達克綜合指數均收於歷史高位。市場受到Delta Air Lines樂觀的盈利預測及Nvidia創紀錄收盤價的提振。

Thomas Frank 08:37 2025-07-11 UTC+2

Nvidia 創歷史:市場上升,公司市值突破 4 兆美元大關

週三,美國股市由科技股為主的納斯達克指數領漲,Nvidia市值一度突破4兆美元,加上美聯儲會議記錄暗示今年可能降息,為股市帶來強勁的收盤表現。 Nvidia在週三早晨成為首家市值達到4兆美元的公司,彰顯其在人工智慧領域的主導地位。

Thomas Frank 10:46 2025-07-10 UTC+2
现在无法通话?
提出您的问题,用 在线帮助.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.