An active fire The Bank of England is expected to raise interest rates today for the thirteenth consecutive meeting.
It is anticipated that the rate will rise by 0.25%, while Bank officials may contemplate raising it by 0.5% to 5% in light of yesterday’s shocking inflation report of 8.7%, which included a 31-year high for core prices of 7.1%.
The stock markets were already under pressure when the decision was issued at noon after Federal Reserve head Jerome Powell signaled yesterday that there would be further rate rises in the US.
The blow to inflation fuels wagers on a 5% bank rate.
According to Deutsche Bank, the City is pricing a 37% chance that the Bank of England will increase interest rates by 0.5% to 5% at noon today.
Market pricing for 76 basis points of rate hikes between June and August suggests a Large rate rise at one of the Next two sessions is inevitable, even if the Bank’s monetary policy committee agrees to raise interest rates by 0.25 percentage points.
The unexpected 8.7% inflation rate released yesterday, together with the core CPI reaching a 31-year high of 7.1%, fueled hopes in the City that the Bank rate would increase to 6% soon.
The UK now appears to be a true outlier on inflation, with the highest rate in the G7 by a significant margin, according to Deutsche Bank strategist Jim Reid.
Should we expect 4.75% or 5%? Mortgage payers and rate-setters are at their wit’s end as an interest rate increase approaches.
Mortgage payers and borrowers; all around London and the UK are facing high noon as the Bank of England is expected to announce one of the most highly anticipated interest rate decisions in a decade on Thursday.
Given that interest rates are already the highest they have been – since 2008, city analysts are confident that Andrew Bailey, the governor of the Bank of England, and his eight counterparts on the Monetary Policy Committee will have to vote through an increase.
The Bank of England is finding it difficult to control inflation towards its 2% objective as it remains at over 9%. Thus demand is mounting for an even Larger – half-point increase to 5%.
Capital Economics Chief Economist Neil Shearing described the rate vote as “finely balanced” but projected that voters would choose a 5% base rate – in part because of Greater wages.
The labor market and pay setting appear to have been more severely affected by inflation in the UK than everywhere else, He continued.
FTSE 100 Short (Sell)
Enter At: 7359.39
T.P_1: 7219.92
T.P_2: 7123.53
T.P_3: 6962.29
T.P_4: 6768.38
T.P_5: 6606.55
T.P_6: 6392.43
S.L: 7810.05
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