BoE hikes 50bp, but uncertainty clouds future tightening path – ABN Amro
|Rates strategist and Senior Economist at ABN Amro offer their take on the August Bank of England (BOE) monetary policy decision.
Key quotes
“The Bank of England (BoE) raised its policy rate by 50bp, which was the biggest increase since 1994 and in line with our and consensus expectations. This brought the bank rate to 1.75% and serves as the sixth consecutive rate hike.”
“The vote split indicates that the MPC committee was almost fully aligned this time with 8-1 MPC members that voted for a 50bp rate increase.”
“During the press conference, BoE Governor Bailey highlighted the exceptional high uncertainty surrounding the BoE’s forecasts and as such, the BoE will follow the ECB and the Fed's path of setting policy ‘’meeting-by-meeting’’. “
“Bailey stated that the BoE has moved from a system of ‘’predictive forward guidance to a framework that is not predictive’’. Therefore, ‘all options are on the table’ for future meetings.”
“The August report offers a much darker economic outlook for the UK compared to the previous report published in May.”
“Inflation is now expected to peak at 13.3% in 2022Q4 and remain elevated for longer than anticipated, with inflation at 9.5% (vs 5.9% prev) in 2023Q3. “
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.