Economist at UOB Group Lee Sue Ann reviews the latest BoE meeting (June 16).
“The Bank of England (BOE)’s Monetary Policy Committee (MPC), at its meeting in Jun, voted by a majority of 6-3 to increase the Bank Rate by 25bps to 1.25%. This is the fifth consecutive policy meeting since Dec that the BOE has raised its key interest rate, taking it to the highest level since 2009 in a bid to fight surging inflation.”
“Importantly, the forward guidance language for higher interest rates was much stronger, endorsed by all the BOE’s voters. In comparison, two members had declined to put forth guidance that more hikes were needed in May. The BOE also raised its forecast for the peak of inflation this year to ‘slightly above’ 11%, reflecting the planned increase in the energy price cap in Oct, and said it now expects the economy to contract in the current quarter.”
“We are thus now pencilling in more rate hikes in the coming months. We look for an additional 100bps hike for the rest of this year, after which we expect the BOE to press pause on its hiking cycle. This should see the Bank Rate at 2.25% by year-end.”
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