It is the BOE day
|BOE
All eyes will be on the BOE today as the bank will announce its monetary policy decision. The interest rate range, which traders expect, is between 50 to 75 basis points. An interest rate hike of 50 basis points will be considered a dovish interest rate hike, and an interest rate hike of 75 basis points will be deemed a hawkish interest rate hike.
We think the bank will press a button today, which it hasn’t done since 1989, an interest hike of 75 basis points. The reason is that the BOE has minimal options regarding what it can do. By delaying their monetary policy decision by another week due to the death of Queen Elizabeth II, the bank had the opportunity to fathom completely the monetary policy decision of the Fed, which is influencing the dollar index.
In addition to increasing the interest rate, the bank is also expected to confirm plans to sell more of the £895 billion of bond holdings—in simple terms reversing further elements of dovish monetary policy.
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