The Bank of England (BoE) raised the interest rate by 75 basis points, as expected to 3%, in a split decision. This is the largest rate hike in 33 years. The pound extended declines after the decision.
The vote was divided. Seven committee members voted for the 75 bps hike, with Dhingra voting for a 50 bps increase and Tenreyro for 25 bps. Those who asked for a lower rise did so warning of the risks of a recession and delays in the impact of monetary policy.
The central bank warned of the possibility of a two-year recession should the bank’s interest rate reach the level reflected in market prices of 5%.
GBP/USD extended the drop after the decision and posted new lows in almost two weeks below 1.1200, while EUR/GBP approached 0.8700.
Source: Fx Street
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