Economist at UOB Group Lee Sue Ann reviews the latest BoE monetary policy meeting.
Key Takeaways
The Bank of England (BOE) left interest rates unchanged on Thu, ending a series of 14 consecutive rate hikes since Dec 2021, when the Bank Rate was just at 0.10%. The Monetary Policy Committee (MPC) had voted 5-4 in favor of maintaining the policy rate, with four members preferring another 25 bps hike to 5.50%.
The surprise move came after UK inflation printed significantly below expectations for Aug. Headline CPI had fallen further to 6.7% y/y, from 6.8% y/y in Jul, and down from the peak of 11.1% in Oct 2022. Core inflation also fell to 6.2% in Aug from 6.9% in Jul, and against consensus of 6.8%. The decline reflected the easing in both services and core goods price inflation.
Our view is that the BOE will keep all options on the table. Even though there is no meeting in Oct, as well as there being one set of wage (17 Oct) and inflation (18 Oct) data before the next meeting on 2 Nov, which is a little to chew on. Barring any huge upside surprise to services inflation or wage data, we think that given the scale of yesterday’s surprise by the BOE, there is a high chance it will choose to pause again in Nov. As such our base case remains for the Bank Rate to remain at 5.25% for the rest of this year.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops below 1.0800 ahead of key US jobs data
EUR/USD is dropping below 1.0800 in the European session on Wednesday. The pair is dragged by a renewed uptick in the US Dollar, as markets trade with caution ahead of a busy EU and US economic docket. US ADP is the key event risk.
GBP/USD battles 1.2600, with eyes on US ADP data
GBP/USD is trading close to 1.2600, snapping a two-day losing streak in European trading on Wednesday. The modest US Dollar decline acts as a tailwind for the pair but the Pound Sterling struggles amid a cautious market mood. US jobs data awaited.
Gold finds buyers near $2,020, awaits US ADP jobs data
Gold is finding a floor near $2,020 early Wednesday, snapping a two-day correction from all-time highs of $2,144 set on Monday. XAU/USD price capitalizes on a broad US Dollar retreat, as Greenback buyers take a breather following this week’s upswing and ahead of the top-tier US ADP Employment Change data.
Bitcoin-based meme coin ORDI price action wobbles after 1,100% rally
The Bitcoin-based BRC-20 meme coin, which had people confused as being an actual valuable token, is now slowly creeping up to that status. ORDI price rise over the past couple of days has been astonishing, and with BTC driving the price and crossing $44,000, ORDI is also gaining rapidly. But not for long.
The Dollar is struggling to trend
For the last three trading sessions, the dollar index has been crossing up and down the 200-day moving average every day. All in all, the flirting with this level has been going on for more than three weeks, during which neither bulls nor bears were able to form a stable trend.