Following its March policy meeting, the Bank of England (BOE) announced that it raised the policy rate by 25 basis points (bps) to 4.25% as expected. Two policymakers, Tenreyro and Dhingra, vote to keep the policy rate on hold at 4%.
"If there were to be evidence of more persistent pressures, then further tightening of monetary policy would be required," the BOE said in its policy statement.
Follow our live coverage of the BOE policy announcements and the market reaction.
Market reaction
GBP/USD is struggling to make a decisive move in either direction following the BOE's policy announcements. As of writing, the pair was trading modestly higher on the day at around 1.2300.
Key takeaways from the policy statement
"Staff forecast Q2 GDP to increase slightly (Feb forecast: -0.4%), Q1 GDP forecast unchanged at -0.1%."
"Q2 CPI likely to be lower than forecast in Feb, due to longer energy price cap and lower wholesale prices."
"CPI remains likely to fall sharply over remainder of 2023, despite upward surprise in Feb."
"Surprising strength in Feb core goods prices reflects volatile clothing prices, may not be persistent."
"UK banking system is well-placed to support economy, including in a period of higher interest rates."
"UK banking system maintains robust capital and liquidity, remains resilient."
"Will continue to monitor UK credit conditions closely."
"Fiscal support in March budget to increase GDP level by around 0.3% over coming years."
"Extended energy price guarantee to lower Q2 CPI by around 1 percentage point vs Feb forecast, other measures to lower CPI by around 0.33 percentage points."
"Wage growth likely to fall back somewhat faster than forecast in Feb due to lower inflation expectations."
"Staff expect 0.2% Q2 employment growth (Feb forecast: -0.4%), no rise in unemployment."
"Businesses see year-ahead inflation of 5.6% in 3 months to Feb vs 6.2% in 3 months to Nov."
"Businesses see year-ahead wage growth of 5.7% in Feb vs 5.8% in Nov."
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 toward 1.0650 ahead of German inflation data
EUR/USD is falling toward 1.0650 in European trading. Dismal China's Manufacturing PMI and pre-US debt deal vote anxiety support the safe-haven US Dollar while markets pare ECB rate hike bets after softer French inflation data. German inflation data, Fedspeak and US House vote eyed.
GBP/USD extends losses toward 1.2350 amid firmer US Dollar
GBP/USD is extending losses toward 1.2350 in the European session. Markets stay jittery amid China growth worries and ahead of the US House vote on the debt deal. Hawkish Fed's Mester underpins the ongoing US Dollar upsurge. More Fedspeak in focus.
Gold price rebound eyes $1,990 and US factors
Gold Price picks up bids to refresh intraday high as buyers cheer a two-day winning streak, after refreshing the lowest levels in 10 weeks. In doing so, the XAU/USD fails to justify the latest rebound in the DXY but aptly cheers the downbeat Treasury bond yields.
BTC bulls recovery plan targets $30,000 as bears exhaust
Bitcoin action slows down, allowing bears to doubt their strength. As more time elapses, the chances of bulls taking over control of BTC become more likely. A spillover effect would be noticeable in Ethereum and Ripple prices.
Risk off flow into month end
We had warned against the market wanting to get overly excited about the news of a US debt ceiling deal that was always going to get done. And now that this reality is coming to fruition, it’s back to focusing on the market drivers where investors need to focus.