Yesterday, the BoE increased interest rates for the 7th consecutive meeting, raising the benchmark to 2.25%, the highest level seen since December 2008. The Bank opted for a 50-basis point increase, which was in line with consensus. There was dissent against this move, which Andrew Bailey voted for himself; 3 of the MPC members voted for a 75-basis point hike whilst 1 voted for 25 basis points. It’s clear the Bank is intent on reigning in inflation and we can expect further hikes to come.
The pound’s reaction was mixed. Whilst the Bank lowered its forecast for peak inflation (11% now vs. 13% previously), it still confirmed a gloomy outlook for the UK economy. Sterling ended up closing the day roughly unchanged following the announcement.
Today’s highlight comes from the UK again with a mini-budget from PM Truss’ newly formed government. Many will be keeping a close eye on any new policies which will genuinely foster growth within the troubled UK economy. Sadly, many fear much of the old-styled policies, aimed at the housing market, will feature.
Have a great weekend.
Written by Viv Savani. 6:39am, September 23rd 2022
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