Bank of England hints at rate hike in 'coming months'

Share
Bank of England hints at rate hike in 'coming months'

Significantly, officials repeated that warning Thursday - even though market expectations for a rate increase have advanced to around the middle of 2018.

Any more defections to that camp on Thursday would be liable to drive the currency higher although, with the economy struggling this year, most traders remain skeptical of the Bank's ability to raise rates at all.

"Clearly the Bank isn't overly concerned about yesterday's poor wage growth data, and sees the United Kingdom economy picking up more quickly than expected", said Hamish Muress, currency analyst at OFX.

A central plank of the Bank's attempts to kick-start the economy since the financial crisis has been to hold interest rates at record lows, cutting them again to their current rate of 0.25 per cent in the wake of June's vote to leave the European Union.

And recall, the Bank has a knack for not delivering on the "imminent" rate rises it has promised in the past.

BoE governor Mark Carney warned last month that this supply-side squeeze means interest rates may have to rise sooner than investors then expected.

The pound on Tuesday was moving closer to $1.33, where it hasn't traded since September 2016, according to FactSet data.

Above: We might finally be seeing a floor in the GBP/EUR established at the August lows.

The composition of the vote from the MPC is also likely to change, with the arrival of new member Sir Dave Ramsden taking the committee back to a full complement of nine members.

The unemployment rate in the United Kingdom fell in July to its lowest level in more than four decades, fueled by increasing participation in the labor force. But in recent months they have become increasingly concerned that subdued investment and feeble productivity growth is hurting the economy's capacity to produce goods and services without causing inflation.

The pound to euro rate rose by 0.25 per cent, this brings gains of 0.66 per cent of the last week however, sterling is still 6.3 per cent offside against the euro.

In the policy statement, the committee saw the potential for interest rates to increase within the next few months if the economy grows as expected and underlying price pressures rise.

Meanwhile, Brexit-fuelled inflation is set to climb above 3% in October - higher than the Bank previously expected.

But in a week when data showed United Kingdom prices rising faster and unemployment falling to a four-decade low, they said their tolerance for above-target inflation was lessening. "As such, the prospect of a series of rate hikes seems remote". Pay fell 0.4% when adjusted for inflation, which is now running just shy of 3%.

"Additionally, profit-taking may later see some correction in the rate".

"On balance we continue to see the pragmatists holding sway", said Sam Hill, senior United Kingdom economist at RBC Capital Markets, of the central bank rate-setters.

Share

Advertisement

Related Posts

Fitbit Higher as Ionic Hold Advantages Over New Apple Watch
Despite the addition of the cellular connectivity , the new generation Apple Watch is nearly similar physically to the Series 2 . He said Apple's revenue from wearables - the Apple Watch, AirPods, and Beats headphones - was the size of a Fortune 500 company.

Whitehouse Latest NE Senator To Join Push For Single-Payer Health Care
Sanders' office will livestream the introduction of the bill here. The giant insurance megalopoly would not choose for you. "Health care is a right, not a privilege", Ms.

Trending: Jurgen Klopp left to rue defence again after Sevilla draw
The Spaniard shone against his former club, laying on the equaliser and proving to be a real threat down the flank. Liverpool may have peppered his goal with shots, but over-exertion was not required on the Spanish stopper's part.

List of school closures: Hendry County to stay closed through Tuesday
On the Atlantic coast off South Carolina, Hilton Head Island's 42,000 residents were under an evacuation order this morning. The system has maximum sustained winds of 50 miles per hour while moving 17 miles per hour north-northwest over Georgia .

New Video Shows Downtown Miami Underwater After Hurricane Irma
Florida's largest utility, Florida Power & Light, said western parts of the state might be without electricity until September 22. The storm then idled as it moved west across the Atlantic - before warmer waters gave it another growth spurt.

Most GOP Voters Trust Trump Over Party Leaders on Bipartisan Dealmaking
But we're willing to withhold judgment until we see more of the kind of deal-making Trump promised to help drain the "swamp". Legislative Affairs Director Marc Short made this calculus clear in statements made during a White House roundtable Tuesday.

Conte underlines Kante's importance to team
Qarabag must be dispatched clinically - goal difference may see Chelsea end up in the Europa League rather than the last 16. Star playmaker Eden Hazard returned for Chelsea and played 12 minutes against the Foxes at the weekend.

New Bluetooth Vulnerability Appears, It's Called Blueborne
The " BlueBorne " flaws would allow a virus to leap from device to device, regardless of the operating system being used. Linux devices released since October 2011 (3.3-rc1) are affected by the remote code execution bug (CVE-2017-1000251).

Skyrim will unleash its chaos on Nintendo Switch this November
What do you think? Watch the Nintendo Direct itself above so you can catch the multitudes of announcements I couldn't cover here. If you haven't yet bought a 3DS system, you might want to hold off until November 3, when a new Pokebal-themed model launches.

What you need to know about the iPhone 8, iPhone X
We highly recommend getting online at least half an hour before iPhone 8 pre-orders start so that you can get yourself situated. In the Steve Jobs Theatre, Cook told the audience of 1000 the iPhone X "will set the path for technology for the next decade".

© 2015 Chester Weekly. All Rights reserved.