Bank of England Analysis and News
- BoE Leaves Policy Tools Unchanged as Expected
- Policymakers Vote 7-2 on Maintain Gilt Purchases, Ramsden Joins Saunders in Hawkish Dissent
- GBP[1] Breaks Above 1.37 on More Hawkish Statement
Bank of England left policy measures unchanged as expected with the Bank Rate remaining at 0.1% and gilt purchases at GBP 875bln. However, the vote split on gilt purchases saw Ramsden joining Saunders in calling for a cut to GBP 860bln. Alongside this, the BoE noted that some developments have meant that the case for tightening has strengthen, which in turn has prompted a shift in money markets pricing in a 15bps rate hike for March 2022 vs Previous May 2022. That said, the March meeting is not a quaterly meeting like February or May, making it unlikely that a hike will take place at March.
UK Money Market See Rate Lift Off by March 2022
Source: Refinitiv
Growth: Bank staff had revised down their expectations for 2021 Q3 GDP growth from 2.9% at the time of the August Report to 2.1%, in part reflecting the emergence of some supply constraints on output. That would leave the level of Q3 GDP around 2½% below its pre-Covid level.
Inflation: The BoE also continue to expect inflation to rise towards 4% in Q4 before returning back to 2% over the medium term and thus sticking with the transitory view on inflation.
GBP/USD[2]: A jump to session highs and breaking above 1.3700 in response to a slightly more hawkish than expected statement. On the topside, near term resistance sits at 1.3722 and 1.3750.
EUR/GBP[3]: Range trading pesists in the cross, having once again failed to maintain a foothold above 0.8600 and thus remains the area to fade rallies into. That said,
