Inflation shock puts Bank of England on course to raise rates again | – #Inflation #shock #puts #Bank #England #raise #rates
SummaryCompaniesInvestors are now awaiting Thursday’s quarterly rate hike. on Wednesday inflation Before the data, the market share was 50-50. Investors will likely see two more 25 bps hikes.
LONDON, March 23 (Reuters) – The Bank of England is expected to raise interest rates for the 11th time in a row on Thursday after an unexpected jump in inflation.
The BoE is trying to reconcile a weak UK economic outlook and worries about global banks with stubbornly high inflation, and it is due to announce its final rate decision at 1200 GMT.
Most economists believed inflation would fall steadily after hitting a 41-year high above 11% in October.
But the data on Wednesday – inflation in February 10Instead of showing a rise to .4%, it continued to decline – immediately following Thursday’s announcement Bank It made it almost a one-way bet on a quarter rate hike.
Investors on Tuesday, the BoE for the first time since November 2021 Bank It was almost split 50-50 on whether to leave interest rates unchanged.
Earlier this week, bets that the BoE would hold off on rate hikes were boosted by the bailout of Credit Suisse and the collapse of Silicon Valley Bank, which showed how some global banks are struggling to adjust to higher borrowing costs.
But investors in exchange rate futures markets are now positioning for two more 25 basis point moves by the BoE by September after Thursday’s expected hike.
on Wednesday USA The Federal Reserve raised key interest rates by a quarter of a percentage point, but said it was on the verge of holding off on further hikes. Europe The Central Bank stuck to its plans last week and raised interest rates by 50 basis points despite the Credit Suisse crisis.
Part of the rise in the headline rate of UK inflation, announced on Wednesday, was due to cold weather in Spain and North Africa causing vegetable shortages. weather The basis that the BoE is following, albeit due to potential one-off factors such as inflation measures also increased.
WHEN WILL BOE STOP?
Ben Nicholl, fund manager at Royal London Asset Management, inflation said the jump was a “shocking data point” that added to other signs that the BoE would struggle to return inflation to its 2% target.
“Only in November did the BoE sit there and say, ‘We’re heading into one of the longest recessions the UK has ever experienced.’ Well, we’ve avoided the recession so far,” said Nicole.
Wage growth is cooling but still well above its historical average, and labor shortages remain acute labour threatens to keep inflationary heat in the market.
The BoE is the first major to start raising rates in December 2021 central bank and was likely to join the Bank of Canada, which stopped raising borrowing costs this month.
BoE Governor Andrew Bailey and his colleagues last month, the prospect of continued inflationary pressures offer they said they were ready to act forcefully if he did.
It will be limited to the Monetary Policy Summary announced by the BoE on Thursday and the minutes of the March meeting. No press conference has been scheduled by Bailey or his top colleagues, although Bailey is scheduled to speak on Monday.
ING economist James Smith said he expected Thursday’s rate hike to prove to be the last in the BoE’s business.
“Assuming that broader inflation data continues to point to a reduction in pipeline pressures, then we suspect the committee will be comfortable adjourning until the next meeting in May,” Smith said.
Graphics by Sumanta Sen; Added by Amanda Cooper report; Written by William Schomberg; Edited by Jonathan Oatis
Our standards: Thomson Reuters Trust Principles.
2023-03-23 04:59:57
Source – reuters
Translation“24 HOURS”