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.
BOE reassesses policy as it projects economy to tip into recession in Q4
BoE last movements on coronavirus countering
BOE Chief Economist Huw Pill noted that the companies' pricing pass-through was excessively high. "I don't want people who are subject to political forces setting monetary policy," Pill added.
Bank of England (BOE) Deputy Governor Dave Ramsden said in Reuters interview on Tuesday, “more likely than not that we will have to raise bank rate further.”
Latest BoE related News
BoE July meeting review
The Old Lady's last hurrah? That is what Bank of England's 50 bps rate hike looks like, one of the last such increases in interest rates, a prelude to a long recession. That is why sterling is suffering, and it has more room to fall.
Following its August policy meeting, the Bank of England announced that it raised the policy rate by 50 basis points to 1.75% as expected. The policy statement revealed that Monetary Policy Committee (MPC) member Silvana Tenreyro voted to hike the rate by 0.25 basis points.
BoE June meeting review
The Bank of England (BoE) announced its monetary policy decision this Thursday and hiked rates for the fifth consecutive time to curb soaring inflation. The Monetary Policy Committee (MPC) voted 9-0 to raise rates by 25 bps to 1.25%.
The tortoise stays behind – the pound fails to receive any applause for the Bank of England's slow-mo approach to tackling inflation. One day after the Federal Reserve raised rates by 75 bps and hours after the Swiss National Bank shocked with a 50 bps move, the BOE's move looks inappropriate.
BoE May meeting review
In line with expectations, the Bank of England (BoE) hiked the Bank Rate by another 25bp to 1.00%. As expected, attention was on forward guidance and not the rate hike itself. As we had expected, the BoE kept the softer forward guidance in place by stating “some degree of further tightening in monetary policy may still be appropriate in the coming months” (our emphasis).
The Bank of England has hiked for the fourth time, though there are further signs that policymakers believe market rate hike expectations have gone too far. We expect another 25bp hike in June and potentially also August, before the committee presses the pause button. The Bank of England has hiked rates by a further 25 basis points, taking Bank Rate to 1%.
BoE April meeting review
The BoE on Thursday raised interest rates by 25 bps to 1.0%. Six of the bank's nine rate-setters supported the 25 bps hike, though three wanted a larger 50 bps move. The rate hike was in line with expectations, but the vote split was more hawkish than expected, with a Reuters poll showing that eight had been expected to support a 25 bps hike and one support no hike.
A UK recession is coming – the cat is out of the sack, and sterling bulls have turned into mice searching for shelter. There is room for more, as the volatile currency pair digests the decision and the monetary policy divergence with the Fed. And I would add that It could also drag the euro down.
BoE March meeting review
In its latest monetary policy announcement, the Bank of England (BoE) opted to raise the benchmark UK interest rate by a further 25bps to 0.75% from 0.50%, as had been widely expected.
A dovish hike – the BoE has delivered a cautious increase of interest rates, similar to what investors had expected from the Fed. One dovish dissenter – Jon Cunliffe who preferred to leave rates unchanged – and a subtle change in tone are genuine reasons to sell sterling.
Brexit is far from over
The UK has formally left the EU on January 31, 2020. However, Britain remains in a transition period, retaining most rights and obligations throughout the transition period which expires at the end of the year.
UK Prime Minister Boris Johnson has ruled out extending the implementation phase despite the COVID-19 pandemic. The deadline to request for such a prolongation passed on June 30. Without an accord, Britain will shift to World Trade Organization rules in 2021, an outcome seen as unfavorable for both sides, and especially the UK.
Several rounds of face-to-face and online talks have failed to yield substantial progress, with London and Brussels unable to reach a "landing zone" on fisheries, regulation, and a "level-playing field" – the EU's demand that the UK follows its rules in return for easy market access. Several political analysts expect to see progress only close to year-end.
What is the BOE?
Founded in 1694, the Bank of England (BoE) is the central bank of the United Kingdom. Sometimes known as the ‘Old Lady’ of Threadneedle Street, the Bank’s mission is "to promote the good of the people of the United Kingdom by maintaining monetary and financial stability".
The Bank of England is responsible for keeping the UK’s economy on the right track. They operate monetary policy by moving Bank Rate up and down and, in certain circumstances, we also supplement this with measures such as quantitative easing.
Who is BOE's president?
Andrew Bailey is Governor of the BoE and Chairman of the Monetary Policy Committee, Financial Policy Committee and the Prudential Regulation Committee. The Governor joined the Bank on 16 March 2020. His appointment as Governor was approved by Her Majesty the Queen.
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The World Interest Rates Table
The World Interest Rates Table reflects the current interest rates of the main countries around the world, set by their respective Central Banks. Rates typically reflect the health of individual economies, as in a perfect scenario, Central Banks tend to rise rates when the economy is growing and therefore instigate inflation.