- Bank of England moves in line with market consensus and rises 25 basis points.
- Haskell, Mann and Saunders voted for a 50-point raise.
- The pound loses ground after the decision.
The Bank of England (BoE) raised the benchmark interest rate by 25 basis points to 1.25% after the meeting of the Monetary Policy Committee (MPC). The movement was in line with what was expected by the market. The pound lost ground after the decision.
It wasn’t 50 points, but more are coming
The interest rate in this way reached the highest level in 13 years. The British central bank aims to continue raising the interest rate. There was a lower expectation of a 50 point rise.
The vote was divided in the MPC, since of the nine members, six were in favor of the rise of 25 points and three (Haskell, Mann and Sauders) called for a rise of 50 basis points.
The BoE sees inflation above 9% in the coming months and reaching above 11% by October. The central bank stated that it will take the necessary measures to bring inflation back to the 2% target in the medium term.
The shape of interest rate hikes will depend on the economic outlook and inflationary pressures.
The pound fell in the market after the decision. GBP/USD fell to daily lows at 1.2070 and EUR/GBP turned positive, back above 0.8600.
Source: Fx Street
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