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☆ Currencies calm but cautious after a weary week
▼ + stars: | 2024-04-22 | by ( ) www.cnbc.com time to read: +3 min

U.S. one hundred dollar bills are being shown in this picture illustration taken in Buenos Aires, Argentina, on Dec. 15, 2023. Eyes are on the yen this week, with the Bank of Japan's, or BOJ, Friday policy review the notable item on the economic calendar. The yen has been one of the biggest losers against the dollar this year, with losses mounting to 9%. The ECB's Robert Holzmann, however, said the ECB probably will not cut rates this year as much as planned if the Fed does not move. BoE Governor Andrew Bailey and Deputy Governor Dave Ramsden alluded last week to Britain's inflation slowing as expected.

Persons: Chris Weston, Weston, Kazuo Ueda, BoE, ECB policymaker Madis Muller, Christine Lagarde, Robert Holzmann, BoE Governor Andrew Bailey, Dave Ramsden, Sterling, Bitcoin Organizations: U.S ., Bank of Japan's, Federal Reserve, Monetary Fund, Bank, Washington , Bank of Japan, European Central Bank, Bank of England, ECB policymaker, ECB, Treasury Locations: Buenos Aires, Argentina, East, Tehran, Iran, Washington, United States, Japan, South Korea, Washington ,, U.S

☆ UK inflation eases less than expected to 3.2% in March, sparking concerns of U.S.-style stickiness
▼ + stars: | 2024-04-17 | by ( Jenni Reid | ) www.cnbc.com time to read: +2 min

Food prices provided the biggest downward drag on the headline rate, the ONS said, while motor fuels pushed it higher. The core figure, excluding energy, food, alcohol and tobacco, came in at 4.2%, compared with a projection of 4.1%. Services inflation, a key watcher for U.K. monetary policymakers, declined from 6.1% to 6% — again above the expectations of both economists and the BOE. This week, investors have been monitoring signs of a cooling U.K. labor market, with unemployment unexpectedly rising to 4.2% in the period between December and February. The central bank's own forecast is for inflation to "briefly drop" to its 2% target in the spring before increasing slightly.

Persons: BOE, BOE Governor Andrew Bailey Organizations: National Statistics, Bank of England, Reuters, Federal Reserve Locations: U.S

☆ Bank of England scraps outdated inflation forecasting model in major overhaul after Fed boss' review
▼ + stars: | 2024-04-12 | by ( Karen Gilchrist | ) www.cnbc.com time to read: +2 min

LONDON — The Bank of England on Friday announced a "once in a generation" overhaul of its inflation forecasting following a long-awaited review by former Federal Reserve Chair Ben Bernanke. The review — initiated following criticism of the central bank's recent policymaking — sets out 12 recommendations which BoE Governor Andrew Bailey said the bank was committed to implementing. They include the scrapping of the Bank's long-held "fan chart" forecasting system and the introduction of a revamped forecast framework. It added that the BoE currently relies more heavily than other central banks on a central forecast, which may not fully account for wider risks or how inflation expectations can become "de-anchored." Additionally, the review said the bank needed to improve its communication with the public, suggesting the it put less emphasis on the central forecast, simplify its policy statement, and reduce repetitiveness."

Persons: Ben Bernanke, —, BoE, Andrew Bailey, Bailey Organizations: Bank of England, City of, Federal, CNBC, Monetary, Bank Locations: City, City of London, United Kingdom, U.S

☆ UK's FTSE 100 lags regional peers as banks, insurers fall
▼ + stars: | 2023-11-29 | by ( Shashwat Chauhan | ) www.reuters.com time to read: +3 min

The blue-chip FTSE 100 (.FTSE) index dipped 0.1%, while the pan-European STOXX 600 (.STOXX) rose 0.5%. The life insurance sector (.FTNMX303010) fell 0.4%, with Prudential (PRU.L) slipping 0.7% after Deutsche Bank reduced its price target on the stock. Banks (.FTNMX301010) slipped 1.7% following a 2.3% fall in HSBC (HSBA.L), which was the biggest weight on the FTSE 100. Among individual stocks Halfords Group (HFD.L) plunged 21.1% after the bicycles-to-car parts retailer narrowed its annual profit forecast range. Reporting by Shashwat Chauhan in Bengaluru; Editing by Dhanya Ann Thoppil and Eileen SorengOur Standards: The Thomson Reuters Trust Principles.

Persons: Toby Melville, Andrew Bailey, BoE Governor Andrew Bailey, Eddie Cheng, Banks, Shashwat Chauhan, Dhanya Ann Thoppil, Eileen Soreng Organizations: London Stock Exchange Group, REUTERS, Aviva, Bank of England, Prudential, Deutsche Bank, U.S . Federal Reserve, Allspring Global Investments, HSBC, Halfords, Thomson Locations: City, London, Britain, Europe, United States, Bengaluru

☆ Europe stocks open higher, head for best week since March after central bank pauses
▼ + stars: | 2023-11-03 | by ( Jenni Reid | ) www.cnbc.com time to read: +1 min

The Stoxx 600 opened 0.3% higher led by autos stocks, up 1.1%. The index gained 1.6% on Thursday, and is heading for its best week-on-week performance since the end of March, according to LSEG data. European stock markets opened higher on Friday, rounding off a weekly rally powered by a series of solid earnings and a perceived dovish tilt by central banks. The Bank of England held rates for a second consecutive meeting. Like Christine Lagarde, president of the European Central Bank — which last week also held rates steady — he said it was too early to talk about rate cuts and that risks to inflation remain.

Persons: BOE Governor Andrew Bailey, Christine Lagarde Organizations: Federal Reserve, Bank of, CNBC, European Central Bank Locations: U.S, Bank of England

☆ Bank of England set to keep rates at 15-year high despite slowdown signs
▼ + stars: | 2023-11-02 | by ( William Schomberg | ) www.reuters.com time to read: +3 min

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. But signs of a slowdown in much of the British economy have become clearer since then and some economists say a recession might already be under way. 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.

Persons: BoE, Mike Riddell, Riddell, Andrew Bailey, Bailey, Rishi Sunak, Sunak, Jeremy Hunt, Hunt, William Schomberg, Catherine Evans Organizations: Bank of England, European Central Bank, U.S . Federal Reserve, Allianz Global Investors, BoE, MPC, Conservative Party, Thomson Locations: U.S

☆ Bank of England rate has peaked, to stay at 5.25% through Q2
▼ + stars: | 2023-10-24 | by ( Jonathan Cable | ) www.reuters.com time to read: +3 min

LONDON, Oct 24 (Reuters) - The Bank of England is likely done with policy tightening and will leave Bank Rate at 5.25% on Nov. 2, according to the vast majority of economists polled by Reuters who did however caution the chance of another increase this year was high. Only 12 economists forecast a quarter point rise to 5.50% at the November Monetary Policy Committee meeting. Inflation was expected to gradually decline across the forecast horizon but it won't reach target until Q2 2025, the poll showed. Around one-third of economists expected the Bank to act earlier. The BoE was forecast to reduce Bank Rate by 50 basis points in the fourth quarter, putting it at 4.50% by year-end.

Persons: James Smith, Elizabeth Martins, BoE Governor Andrew Bailey, BoE, ING's Smith, Jonathan Cable, Prerana Bhat, Sujith Pai, Jonathan Oatis Organizations: Bank of England, Reuters, Bank, ING, MPC, HSBC, United States Federal Reserve, European, Thomson

☆ UK stocks fall after Bailey's hawkish tone on interest rates
▼ + stars: | 2023-10-13 | by ( Khushi Singh | ) www.reuters.com time to read: +2 min

The commodity-focussed FTSE 100 (.FTSE) was down 0.1%, while the mid-cap index FTSE 250 (.FTMC) lost 0.5%. The yield on the UK benchmark bond edged higher after Bailey's comments but remained lower for the day at 4.402%. "Although higher dollar and yields would typically weaken gold, the geopolitical concerns are pushing gold higher," said Giles Coghlan, chief market analyst at GCFX. Industrial metal miners (.FTNMX551020) also advanced 0.6% following a rise in copper prices. UK wealth manager St James's Place (SJP.L) was pushed by regulators to overhaul fees, with the stock tumbling 13.5% to the bottom of the FTSE 100.

Persons: Toby Melville, Ashmore, Andrew Bailey, BoE Governor Andrew Bailey, Giles Coghlan, Coghlan, St James's, Khushi Singh, Sonia Cheema, Sohini Organizations: London Stock Exchange, REUTERS, Bank of England, Mining, Shell, BP, St, Thomson Locations: Canary Wharf, London, Britain, James's, Iran, Israel, China, Bengaluru

☆ Central banks across Europe pause for breath after mammoth rate hike run, but face 'triple dilemma'
▼ + stars: | 2023-09-25 | by ( Jenni Reid | ) www.cnbc.com time to read: +7 min

U.K. pauseThe Bank of England opted to pause interest rate moves after 14 straight hikes, keeping its main policy rate at 5.25%. The decline came despite interest rate hikes generally boosting the value of a currency. Scandinavian inflationIn northern Europe, Norway and Sweden opted for rate hikes on Thursday and suggested that further tightening could be ahead. Norway's headline inflation rate was 4.8% in August, with core inflation at 6.3%. The Norges Bank forecast now indicates a policy rate of 4.5% through 2024, up from the current 4.25%.

Persons: Bank of England Andrew Bailey, BoE, Alastair Grant, ALASTAIR GRANT, Carsten Brzeski, BOE, Andrew Bailey, Paul Dales, Simon French, Panmure Gordon, Thomas Jordan, Jordan, Ida Wolden Bache, Bache Organizations: Bank of England, The Bank of England, Getty, Afp, ING, CNBC, of England, Capital Economics, U.S . Federal, HSBC, Panmure, Swiss National Bank, European Central Bank, ECB, U.S, Norway's Norges Bank, Norges Bank Locations: London, U.K, Paul, Switzerland, Swiss, Europe, Norway, Sweden, Norway's

☆ Bank of England on brink of rate hike pause after inflation surprise
▼ + stars: | 2023-09-20 | by ( William Schomberg | ) www.reuters.com time to read: +3 min

Investors piled into bets on the BoE keeping Bank Rate at 5.25% on Wednesday as soon as official data showed a surprise fall in the pace of price growth. Other analysts said they still thought a final BoE rate hike was the most likely outcome after a recent jump in global oil prices, but they stressed it could go either way. "We stick with our call for a hike, but now see this as a coin toss," JP Morgan economist Allan Monks said. British inflation is almost double the rate in the United States, where the Federal Reserve on Wednesday kept borrowing costs on hold. Last week, the European Central Bank raised rates to a record high but signalled that it was likely to pause.

Persons: BoE, Goldman Sachs, JP Morgan, Allan Monks, BoE Governor Andrew Bailey, Rishi Sunak, Bailey, Dominic Bunning, William Schomberg, Alex Richardson Organizations: Bank of England, Monetary, British, ECB, FX Research, HSBC, Federal Reserve, European Central Bank, Thomson Locations: United States

☆ Bank of England to raise Bank Rate to 5.50% in September, significant minority expect further hike: Reuters poll
▼ + stars: | 2023-09-14 | by ( Shaloo Shrivastava | ) www.reuters.com time to read: +4 min

Nearly all 65 economists in the Sept. 11-13 Reuters poll expected the BoE to hike its Bank Rate by 25 basis points to 5.50% this month, in line with interest rate futures pricing. Survey medians showed the Bank Rate was expected to peak at 5.50%, matching rate futures pricing, and stay there until mid-2024. While 28 economists expected the Bank Rate to peak at 5.75%, two said 6.00%. Nine of 16 gilt-edged Market Makers (GEMMs) that participated in the poll predicted a 5.50% peak rate and seven said 5.75%. A separate Reuters poll showed average house prices in Britain were predicted to fall 4% this year and flatline in 2024 before rising in 2025.

Persons: BoE, Maja Smiejkowska, Ellie Henderson, BoE Governor Andrew Bailey, Catherine Mann, Shaloo Shrivastava, Anitta Sunil, Purujit Arun, Maneesh Kumar, Pranoy, Ross Finley, Hari Kishan, Mark Potter Organizations: Bank of England, REUTERS, Rights, Reuters, HSBC, MPC, Royal Institution, Chartered Surveyors, Thomson Locations: London, Britain, Investec

Workers walk through the Canary Wharf financial district, ahead of a Bank of England decision on interest rate changes, in London, Britain, August 3, 2023. The unemployment rate rose, the number of people in work fell sharply and vacancies dipped below 1 million for the first time in two years, the Office for National Statistics (ONS) said on Tuesday. Yet if incoming data doesn't turn definitively, another hike to a terminal rate of 5.75% is absolutely on the table." The unemployment rate rose to 4.3% in the three months to July from 4.2% a month earlier, its highest since the three months to the end of September 2021, the ONS said. Including bonuses, pay rose by 8.5% compared with the 8.2% consensus, boosted in part by backdated pay for healthcare workers.

Persons: Toby Melville, BoE, Hugh Gimber, they've, Andrew Bailey, Jeremy Hunt, Andy Bruce, David Milliken, Sachin Ravikumar, David Holmes Organizations: Bank of, REUTERS, Bank of England, National Statistics, Morgan Asset Management, Thomson Locations: Bank of England, London, Britain

☆ Take Five: Doves versus hawks
▼ + stars: | 2023-09-08 | by ( ) www.reuters.com time to read: +5 min

Key UK jobs data and a G20 summit, marked by the absence of China's Xi Jinping, are also in focus. The doves urge caution; the most hawkish hawks say a pause is not a done deal, but haven't explicitly called for a hike either. Wednesday's August U.S. inflation data, followed by producer price and retail sales numbers a day later, are the next test. Next up are consumer and factory price data this weekend, with industrial output and retail sales out on the 15th. The unemployment rate has been edging above last year's 48-year low, indicating some softening in the jobs market, while basic earnings are rising at record pace.

Persons: Andrew Kelly, China's Xi, Ira Iosebashvili, Kevin Buckland, Li Gu, Amanda Cooper, Ahmad Ghaddar, haven't, Goldman Sachs, Xi Jinping, He's, BoE Governor Andrew Bailey, BoE, RUSH Brent, Dhara, Philippa Fletcher Organizations: Financial, of, REUTERS, European Central Bank, United States, Key, Yoruk Bahceli, ECB, Reuters, Huawei, SMIC, West, Bank of England, Thomson Locations: of Manhattan , New York City, U.S, Yoruk, Amsterdam, New York, Tokyo, Shanghai, London, China, United States, Washington, Beijing, India, Britain, Saudi Arabia, Russia, Iran, Venezuela, Libya

☆ UK employers curb hiring at fastest rate in over 3 years: REC
▼ + stars: | 2023-09-07 | by ( David Milliken | ) www.reuters.com time to read: +2 min

Workers walk through the Canary Wharf financial district, ahead of a Bank of England decision on interest rate changes, in London, Britain, August 3, 2023. REC also reported that starting salaries rose at the joint-slowest pace since March 2021, although this was still a large increase by historic standards. A BoE survey on Thursday showed employers expect to raise wages by 5% over the coming year, above the 3-4% rate typical before the pandemic, when inflation stayed close to target. REC said there were "widespread reports" from its members that the pool of jobseekers had been swollen by increased redundancies. The REC surveyed around 400 recruitment agencies between Aug. 10 and Aug. 24.

Persons: Toby Melville, Neil Carberry, BoE, BoE Governor Andrew Bailey, jobseekers, David Milliken, Frances Kerry Organizations: Bank of, REUTERS, Confederation, REC, Bank of England, Thomson Locations: Bank of England, London, Britain

Sterling initially dropped, reflecting disappointment after traders had priced in a 30% chance of another 50 bp hike. Longer-term gilt yields, more responsive to investors' perceptions about the economic growth trajectory, rose by the most in a month. Governor of the Bank of England Andrew Bailey attends a press conference for the Monetary Policy Report August 2023, at the Bank of England in London, Britain, August 3, 2023. Two-year gilt yields have risen by more than 120 basis points this year, more than double the increase of their U.S. equivalent. On Thursday, two-year gilt yields were down 5 bps in late trade, while those on 30-year debt rose 10 bps, the most in a month, to 4.66%.

Persons: BoE, Andy Burgess, Andrew Bailey, Sterling, we've, Bank of England Andrew Bailey, Alastair Grant, Jeremy Hunt, Carl Shepherd, they'll, juicier, Peter Goves, Kirsten Donovan Organizations: Bank, Bank of England, Monetary, REUTERS, Conservative, Newton Investment Management, Swiss, MFS Investment Management, Reuters Graphics, Thomson Locations: AMSTERDAM, LGIM, London, Britain, U.S

☆ Bank of England set to raise rates to 5.25% as high inflation persists
▼ + stars: | 2023-07-28 | by ( David Milliken | ) www.reuters.com time to read: +5 min

Expectations for peak BoE rates reached 6.5% on July 11 after data showed record wage growth. But they fell back after a bigger-than-expected decline in consumer price inflation. Still, that inflation rate is nearly four times the BoE's 2% target and double the rate in the United States. Following the end of Silvana Tenreyro's tenure on the BoE's Monetary Policy Committee, fellow external member Swati Dhingra is likely to be alone in making the case that producer price inflation - rather than wage growth - is a better guide to future consumer price inflation trends. Annual producer price inflation fell to 0.1% in June, its lowest since December 2020, down from a high of nearly 20% last July, which it hit just a few months before CPI peaked at 11.1%.

Persons: BoE, Andrew Goodwin, BoE Governor Andrew Bailey, Dave Ramsden, Ramsden, Peter Schaffrik, Cathal Kennedy, Silvana Tenreyro's, Swati Dhingra, Megan Greene, Bailey, Huw Pill, David Milliken, Kirsten Donovan Organizations: Bank of England, U.S . Federal Reserve, European Central Bank, Oxford Economics, Reuters, MPC, HSBC, RBC, Committee, Kroll Institute, Tenreyro, Monetary, Thomson Locations: Britain, United States, Germany

☆ Bank of England forecasts 150 billion pound loss from QE gilt programme
▼ + stars: | 2023-07-25 | by ( David Milliken | ) www.reuters.com time to read: +3 min

LONDON, July 25 (Reuters) - The Bank of England forecast on Tuesday that it would make a net loss of just over 150 billion pounds ($193 billion) over the next 10 years as it unwinds its quantitative easing (QE) gilt purchases, up from 100 billion pounds projected in April. In the short term, the BoE expects the government to pay around 40 billion pounds a year in 2023, 2024 and 2025, roughly 10 billion pounds a year more than its last estimate in April. Markets currently expect BoE rates to peak at 5.75% later this year, up from around 5% at the time of April's report. The BoE projections assume holdings continue to fall at their current target rate of 80 billion pounds a year. That is still more than 50 billion pounds greater than forecast in April.

Persons: Rishi, BoE, BoE Governor Andrew Bailey, David Milliken, Paul Sandle, Kylie MacLellan, Andy Bruce Organizations: Bank of England, Conservative Party, Thomson

The BoE said in May it expected June inflation would fall to 7.9%, moving further away from October's 41-year high of 11.1% but still way above its 2% target. Economists polled by Reuters had expected the core measure of price growth to hold at 7.1%. Despite June's drop, Britain's inflation rate remains the highest among the world's top seven rich economies. In Western Europe, only Iceland had a higher rate of inflation in June. Suren Thiru, Economics Director at ICAEW, an accountancy body, said July's inflation rate was likely to slow to below 7%.

Persons: Sterling, BoE, James Smith ,, BoE Governor Andrew Bailey, Rishi Sunak, Jeremy Hunt, Hunt, William Schomberg, William James, Sarah Young, Catherine Evans Organizations: Reuters, Bank of, Bank of England, U.S ., Reuters Graphics, National Statistics, Labour Party, Sunak's Conservative Party of, Reuters Graphics Reuters, Manufacturers, Thomson Locations: Bank of England, May's, Western Europe, Iceland, Britain

[1/2] People walk outside the Bank of England in the City of London financial district in London, Britain May 11, 2023. REUTERS/Henry Nicholls//File PhotoLONDON, July 12 (Reuters) - Britain's economy is so far proving resilient to a surge in interest rates over the past year and a half, but it will take time for the full impact to feed through, the Bank of England said on Wednesday. "The UK economy has so far been resilient to interest rate risk, though it will take time for the full impact of higher interest rates to come through," it said. It said British banks were less exposed than households to the adverse effects of higher interest rates, especially compared with financial institutions in other countries, while the corporate sector remained "broadly resilient". "Nevertheless, higher financing costs are likely to put pressure on some smaller or highly leveraged firms," it added.

Persons: Henry Nicholls, BoE, BoE Governor Andrew Bailey, David Milliken, Huw Jones, William Schomberg, Kevin Liffey Organizations: Bank of England, REUTERS, The Bank, Bank, Silicon Valley Bank, Thomson Locations: City, London, Britain, Silicon

☆ UK's Hunt says government and BoE will tame inflation
▼ + stars: | 2023-07-10 | by ( David Milliken | ) www.reuters.com time to read: +2 min

British inflation hit a 41-year high of 11.1% in October and has been slower to fall than in other big economies. Last month the BoE unexpectedly raised its key interest rate by half a percentage point to 5%, after inflation held at 8.7% in May. Prime Minister Rishi Sunak promised in January to halve inflation this year, a goal which now looks challenging. The finance minister added that businesses should show restraint on profit margins, saying "margin recovery benefits no one if it feeds inflation". Reducing inflation "means taking responsible decisions on public finances, including public sector pay, because more borrowing is itself inflationary", Hunt said, sticking close to previous statements.

Persons: Jeremy Hunt, Hunt, BoE Governor Andrew Bailey, BoE, Bailey, Rishi Sunak, David Milliken, Christina Fincher Organizations: Bank of England, Governor, Conservative Party, Thomson

☆ Squeezed UK households tap into savings at record pace
▼ + stars: | 2023-06-29 | by ( Andy Bruce | ) www.reuters.com time to read: +3 min

Unsecured lending to consumers rose by 1.144 billion pounds ($1.45 billion) in net terms last month after a 1.513 billion-pound increase in April. A Reuters poll of economists had pointed to net consumer credit lending of 1.5 billion pounds in May. Thursday's data pointed to mixed signals from the housing market, with mortgage rates for new borrowers soaring past 6% this month in many cases. The value of net mortgage lending contracted in May by 92 million pounds, following a 1.466 billion-pound fall in April. It marked the first back-to-back falls in net mortgage lending since records began in 1986.

Persons: BoE, Ashley Webb, BoE Governor Andrew Bailey, Paul Heywood, Andy Bruce, William Schomberg, Emelia Organizations: Bank of England, Savings and Investment, Consumer, Capital Economics, Reuters, Equifax, Thomson

☆ UK consumer morale touches 17-month high despite inflation pain - GfK
▼ + stars: | 2023-06-22 | by ( Suban Abdulla | ) www.reuters.com time to read: +2 min

LONDON, June 23 (Reuters) - British consumer sentiment hit its highest level since January 2022 as households turn more optimistic about their finance and economy, despite stubborn inflation and rising interest rates, market research firm GfK said on Friday. While British consumer price inflation has eased from the 41-year high of 11.1%, households are still grappling with the highest inflation rate among major rich economies, running at 8.7% in May, unchanged from April. "If consumers continue to weather the current economic storm, then this will provide a firm foundation for getting back to growth," Staton said. GfK said three measures of consumer sentiment edged up in June compared to the previous month when all five indicators pushed up. Reporting by Suban Abdulla; editing by David MillikenOur Standards: The Thomson Reuters Trust Principles.

Persons: GfK, Liz Truss's, Joe Staton, Staton, BoE, Andrew Bailey, Suban Abdulla, David Milliken Organizations: Bank of England, Thomson

☆ Explainer: Why is inflation so high in the UK?
▼ + stars: | 2023-06-21 | by ( William Schomberg | ) www.reuters.com time to read: +4 min

Although down from 11.1% last October, it left the country with the highest inflation rate among the Group of Seven advanced economies. Higher core inflation is seen as a sign that price growth is more likely to remain persistently high. Another gauge of underlying price pressure that is watched closely by the BoE - services price inflation - also rose. WHY IS FOOD INFLATION SO HIGH IN THE UK? Industry data published on Tuesday showed British grocery inflation eased slightly for the third month in a row in June.

Persons: BoE, BoE Governor Andrew Bailey, William Schomberg, Catherine Evans Organizations: Bank of England, Reuters, Britain, Food and Agriculture Organization, United Nations, European Union, OF, Investors, Thomson Locations: United States, Europe, Germany, Britain, China, Japan, Ukraine, London, Brussels

☆ Bank of England set to raise rates to 4.75% as inflation slow to fall
▼ + stars: | 2023-06-16 | by ( David Milliken | ) www.reuters.com time to read: +5 min

However, Neiss thinks the BoE is unlikely to raise interest rates as much as markets have priced in. In a Reuters poll this week, economists predicted the BoE would raise interest rates just twice more, taking rates to a peak of 5% by August or September. The BoE faces three big challenges when assessing how much more rate tightening it needs to do. Fewer households have mortgages and more are on fixed rates - so a key channel for higher interest rates to affect the economy now operates with a delay. "If the Bank of England accelerated policy tightening now, that would smack of panic or a loss of control," McGuire said.

Persons: Henry Nicholls, BoE, BoE Governor Andrew Bailey, Bailey, Katharine Neiss, Neiss, Christine Lagarde, Richard McGuire, Swati Dhingra, Silvana Tenreyro, Megan Greene, Tenreyro, McGuire, Yoruk Bahceli, David Milliken, Toby Chopra Organizations: Bank of England, REUTERS, of, U.S . Federal Reserve, European Central Bank, Italy, Fed, ECB, Reuters, homebuyers, Rabobank, MPC, Thomson Locations: City, London, Britain, of England

The rapid rise in gilt yields has consequences for the wider economy. To some investors, gilts now increasingly look a bargain as 6% BoE interest rates appear unrealistic. Two-year gilt yields have risen by 1.1 percentage points this year, compared with a 0.3 percentage point increase for German two-year yields and 0.2 percentage points for U.S. Treasuries . Raising interest rates to 6% would "succeed in destroying demand" in the wider economy, he said. Ten-year gilt yields now pay an interest rate nearly 2 percentage points higher than the equivalent German government bond .

Persons: BoE, Liz, Britain's, Jim Leaviss, BoE Governor Andrew Bailey, gilts, We've, Mike Riddell, Riddell, Moyeen, There's, Islam, Naomi Rovnick, David Milliken, Toby Chopra Organizations: Labour Party, Bank of England, Bank of, Italy, Reuters Graphics, Allianz Global Investors, U.S, Barclays, Thomson Locations: Bank of England, Britain, British, gilts

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