Following its November policy meeting, the Bank of England (BoE) announced that it raised the policy rate by 75 basis points (bps) to 3%. Policymakers voted 7-2 in favour of this decision. One policymaker voted for a 25 bps hike and one voted for a 50 bps.
Follow our live coverage of the BoE policy announcements and the market reaction.
The British pound came under renewed bearish pressure with the initial reaction. As of writing, GBPUSD was down 1.6% on the day at 1.1208.
Key takeaways from policy statement
"Majority of MPC judge further increases in bank rate may be required, albeit to a lower peak than 5.2% priced into markets."
"If the outlook suggests more inflation pressure, MPC will respond forcefully as necessary."
"Very challenging outlook for UK economy; financial conditions have tightened materially since August."
"BoE forecast based on government fiscal policy up to Oct. 17, assumes energy support continues at around half current scale for 18 months after April 2023."
"Market rates imply more BoE tightening than Aug, show bank rate at 3.0% in Q4 2022, 5.2% in Q4 2023, 4.7% in Q4 2024 (Aug: 2.4% in Q4 2022, 2.9% in Q4 2023, 2.4% in Q4 2024)."
"Policy report shows inflation peaking at around 11% in Q4 (Sep forecast: peak of just under 11% in Oct. 2022)."
"Forecasts show 2.9% peak-to-trough fall in GDP based on market rates, around 1.7% if bank rate held at 3%."
"Forecast shows inflation in one year's time at 5.20% (Aug forecast: 9.53%), based on market interest rates and modal forecast."
"Forecast shows inflation in two years' time at 1.43% (Aug forecast: 2.00%), based on market interest rates."
"Forecast shows inflation in three years' time at 0.02% (May forecast: 0.76%), based on market interest rates."
"Forecast shows that if rates held at 3%, inflation 2.16% in two years' time at, 0.84% in three years."
"BoE estimates GDP growth of -0.5% QQ for Q3 2022 (Sep forecast: -0.1% QQ), sees -0.3% QQ in Q4 2022, based on market rates."
"BoE estimates GDP in 2022 +4.25% (Aug forecast: +3.5%), 2023 -1.5% (Aug: -1.5%), 2024 -1% (Aug: -0.25%), based on market rates."
"BoE estimates real post-tax household disposable income in 2022 -0.25% YY (Aug: -1.5%), 2023 -1.5% (Aug: -2.25%), 2024 +0.75% (Aug: +0.75%)."
"Policy report estimates unemployment rate 3.65% in Q4 2022 (Aug forecast: 3.67%); Q4 2023 4.94% (Aug: 4.68%); Q4 2024 5.86% (Aug: 5.68%), Q4 2025 6.40%."
"Majority of MPC favoured 75 bp rate hike because of domestic price pressure, fiscal policy."
"BoE estimates wage growth +5.75% YY in Q4 2022 (Aug forecast: +5.25%), Q4 2023 +4.25% (Aug: +5.25%), Q4 2024 +2.75% (Aug: +2.75%)."
"Majority of MPC say 75 bp increase would reduce risk of extended, costly tightening later."
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.
Follow us on Telegram
Stay updated of all the news
EUR/USD stays below 1.0900 as Q1 comes to an end
EUR/USD has lost its traction and declined below 1.0900 in the American session on Friday. Quarter-end flows seem to be allowing the US Dollar find some demand but the risk-positive market environment seems to be limiting the pair's downside ahead of the weekend.
GBP/USD trades below 1.2400, looks to post weekly gains
GBP/USD has edged lower after having tested 1.2400 earlier in the day but remains on track to end the third straight week in positive territory. The upbeat mood remains intact after soft PCE inflation data from the US, making it difficult for the US Dollar to continue to gather strength.
Gold tries to stabilize near $1,980 following earlier spike
Gold price has returned to the $1,980 area following a spike above $1,987 with the initial reaction to lower-than-expected PCE inflation figures from the US. Meanwhile, the benchmark 10-year US Treasury bond yield stays in the red near 3.5%, providing support to XAU/USD.
Will Dogecoin price pull an XRP and rally 60% next week?
Dogecoin price has been in a tight range bound movement since November 22. The recent recovery above the range low looks promising and hints at an explosive move for next week.
Week ahead – Nonfarm payrolls to set the tone for US dollar
With the banking turmoil receding, market participants will turn their attention back to economic releases. The spotlight will fall on the US employment report.