BoE hints at 'earlier' rate hikes as MPC adopts more hawkish stance

BoE hints at 'earlier' rate hikes as MPC adopts more hawkish stance

BoE hints at 'earlier' rate hikes as MPC adopts more hawkish stance

The Bank of England's rate-setters voted 9-0 to hold United Kingdom rates at 0.5%, as expected, giving them time to assess how the world's sixth-biggest economy copes with the approach of Brexit.

In the Inflation Report, the bank said UK GDP growth was projected to remain around its current pace, a slightly stronger near-term outlook than in November, underpinned by strengthening global growth.

The UK economy has slowed since the 2016 Brexit vote but it has fared better than many investors expected at the time of the referendum, thanks largely to the much stronger global rebound in countries such as the US, Germany and other key trading partners. The central bank has said it plans to gradually scale back its emergency levels of stimulus.

Investors are more focused on whether any of the nine rate-setters voted for a hike.

Adjusting rates at the wrong time can cause economic turbulence, so BoE policymakers could consider falling inflation a "free move".

The Pound to Australian Dollar exchange rate has fallen by -0.7% on 9 February, following hawkish statements from Bank of England (BoE) Governor Mark Carney.

"The Bank of England has been pretty adept at guiding investors' rate expectations: as a outcome, markets took the autumn rate hike in its stride".

Almost 800 Flights Reportedly Canceled in Chicago Area Due to Snowstorm
Weather service meteorologist Trent Frey says the forecast is for up to nine inches of snow in Detroit through late Friday. Crashes were reported, including a multi-vehicle smashup that closed a stretch of eastbound Interstate 94 near Ann Arbor.

That will be excellent news for companies and, potentially, free up more capital to be invested in profitable activities rather than simply filling in pension deficits. The disruption will be even bigger if May's government fails to secure a transition agreement with other European Union countries by the end of March - a year before Britain is scheduled to leave the bloc. We therefore remain underweight fixed income assets, and remain short duration. It should also be taken into account that pre-Brexit the BoE would constantly make hints at change sin rates yet did not make a change for six years.

There are signs that Britain's economy is finally working off the hangover of the 2007-09 crisis.

Mr Carney refused to be drawn on the exact timing of future hikes, but said they would need to rise "somewhat earlier and by a somewhat greater degree" than expected in November. At the same time, many exporters are riding a wave of demand from the world economy.

"Rates have held for now, but high inflation and stagnant wage growth, coupled with a potential interest rate rise in the coming months, will have an impact on anyone with a mortgage, loan or credit card - particularly those who are already finding it tricky to make ends meet".

The services, factory and construction sectors all showed weaker-than-expected growth in January, according to surveys.

But with the economy improving, the bank decided in November 2017 to raise the rate by 25 basis points to 0.5% - its first hike in a decade - to control inflation which was 3.1% (CPI) in November.

"I don't know", he said.

Related news