$GBINTRS - BoE's Snowball

已更新

- The Bank of England (BOE) decided to deliver its #inflation medicine in a bigger dose
at their recent monetary policy committee meeting.

The bank made the shock decision to raise borrowing costs a half percentage point,
taking the official rate to 5% ;
double the size of the increase anticipated by most economists.

BoE hiking interest rates to 5% ,
it adds further strain to millions of homeowners across the country.
The Central Bank Rates was upped by 0.5% from 4.5% previously
and remains at it's Highest Level since 2008 Financial Crisis.

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now sitting at 5.25%

The Bank of England raised its policy interest rate by 25 basis points to 5.25% during its August meeting, marking a 14th consecutive increase, and bringing borrowing costs to fresh 2008 highs, as the central bank continues to battle high inflation. In a new development, the bank warned that the borrowing conditions may remain tight for a prolonged period.

(source: TradingEconomics)
tradingeconomics.com/united-kingdom/interest-rate

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- Rate Hikes put to Pause

(source; TradingEconomics)
The Bank of England held its policy interest rate at 5.25% on September 21st, keeping borrowing costs at their highest level since 2008, as policymakers opted for a wait-and-see approach following the latest inflation and labor data, which suggested that the accumulated impacts of previous policy tightening might be taking effect. It was the first pause in policy tightening in nearly two years, following the central bank's unprecedented 515 bps hikes. The Monetary Policy Committee voted 5-4 in favor of holding rates steady, with four members advocating for an additional 25 bps increase. The central bank also stated that CPI inflation is expected to decline significantly in the near term, reflecting lower energy inflation, despite renewed upward pressure from oil prices, and further declines in food and core goods price inflation. Policymakers have reiterated their commitment to tightening policy further if deemed necessary.

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'BoE Leaves Rates Steady'

The Bank of England kept its Bank Rate at a 15-Year High of 5.25% for a Second Consecutive Meeting,
in line with market forecasts, as policymakers assess persistently high inflation and signs of an economic slowdown.
Three policymakers voted for a rate hike, compared to four in the September meeting.

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ECB & BoE Push Back Against Rate Cuts Expectations

The ECB and BoE left interest rates ( & ) at multi-year highs while committing to sustain these restrictive levels for as long as needed.
This stands in contrast to the US Federal Reserve,
which unexpectedly signaled yesterday its intention to implement three 25bps rate cuts in 2024 for

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(First meeting of 2024)

The Bank of England kept the key Bank Rate unchanged at a 16-year high of 5.25% for the fourth consecutive time during its first meeting of 2024, in line with market expectations.
However, two policymakers preferred to increase it by 25bps while one member preferred to reduce it by 25bps.
The central bank said monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, but dropped a reference to further tightening and acknowledged that the risks to inflation are more balanced.
Still, key indicators of inflation persistence remain elevated although services inflation and wage growth have fallen by somewhat more than expected. Policymakers expect GDP growth to pick up gradually during the forecast period, in large part reflecting a waning drag on the rate of growth from past increases in Bank Rate.
CPI inflation is projected to fall temporarily to the 2% target in Q2 2024 before increasing again in Q3 and Q4.

source: Bank of England

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The Bank of England maintained the Bank Rate at 5.25% during its March meeting, its highest level since 2008, as policymakers awaited clearer signals indicating that the country's persistent inflationary pressures had subsided.
The Monetary Policy Committee voted by a 8-1 margin in favor of keeping rates unchanged, with one member advocating for a 25 basis point decrease.
This decision deviated from market expectations, which had pointed to a slightly more hawkish 7-2 vote, with one member advocating for the cut and another member advocating for a hike.
The announcement came a day after data revealed that the country's CPI rate had dropped to 3.4%, its lowest level in almost two-and-a-half years. Governor Bailey expressed optimism about Britain's economic trajectory, suggesting that conditions were favorable for the central bank to begin reducing interest rates, but stressed the necessity for greater certainty regarding the economy's control over price pressures.

source: Bank of England

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BoE Signals Cut is Coming in the Summer

The Bank of England maintained the key bank rate at 5.25%, the highest level since 2008, in line with market expectations.
However, two committee members preferred to reduce the rate by 0.25pp, compared to only one member in the previous meeting. Meanwhile, Governor Bailey said a rate cut in June is neither “ruled out or planned” bringing to the table a 50% chance of reduction next month.

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(June/2024)
source: Bank of England

The Bank of England decided to maintain the Bank Rate at 5.25% during its June meeting, as expected, with two members advocating for a decrease to 5%.
Also, some policymakers noted that the decision not to cut was “finely balanced”.
Recent economic indicators show inflation has returned to the target of 2%, driven by moderating inflation expectations and declining energy prices from the previous year.
GDP growth has exceeded expectations, but underlying economic surveys suggest a slower pace.
The MPC acknowledged a looser labor market despite tight historical standards and is committed to maintaining a restrictive monetary policy until inflation risks diminish sustainably.
They remain vigilant about persistent inflationary pressures and will adjust policy as necessary based on upcoming economic data and forecasts.

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BoE Cuts Rates (July/2024)
source: Bank of England

-The Bank of England reduced its key base rate by 25 bps to 5% from a 16-year peak of 5.25%, and in line with expectations.
The central bank said it is now appropriate to reduce slightly the degree of policy restrictiveness but will continue to monitor closely the risks of inflation persistence and will decide on further steps at each meeting.