in the economy that some see as a sign of a recession starting, the BoE is expected to keep Bank Rate at 5.25% for a second meeting in a row after 14 back-to-back increases, a Reuters poll of economists showed last week.The BoE’s Monetary Policy Committee is facing an inflation rate more than double that of the euro zone and almost twice the U.S. rate. It voted by only a narrow 5-4 margin in September to halt its run of increases in borrowing costs.
Mike Riddell, a senior portfolio manager at Allianz Global Investors, said the long lags between changes in rates and their impact meant most of the BoE’s increases in borrowing costs between late 2021 and August this year was yet to be felt.
The BoE – which some economists and politicians criticised for not sounding aggressive enough about quashing the surge in prices early on – has said it is determined to stamp out the long-term inflation risks to the economy, chief among them strong rises in pay growth. headtopics.com
The central bank said in its last set of economic forecasts in August that inflation would only return to 2% in the second quarter of 2025. But Bailey and his MPC colleagues are likely to reiterate that they are ready to raise rates higher if needed.
Bank of England Preview: Rates to Stay Put but QT due for Review?Market consensus is heavily skewed towards rates remaining unchanged but the consequences of aggressive rate hikes emerge via spending, housing and economic data Read more ⮕