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☆ Bank of England to press on with rate hikes, peak at 5.00% in Q3
▼ + stars: | 2023-06-14 | by ( Jonathan Cable | ) www.reuters.com time to read: +4 min

In December 2021 the BoE was one of the first major central banks to draw a line under its ultra-loose pandemic-era monetary policy. It has now raised borrowing costs by 440 basis points across 12 consecutive meetings in modest-sized rate rises. All 64 economists polled June 12-14 said the BoE would add another 25 basis points to Bank Rate on June 22, taking it to 4.75%. A majority of economists surveyed, 52 of 64, said Bank Rate will have peaked by end-August with the median forecast putting it at 5.00%. Although starting later, both the Fed and the European Central Bank have largely been raising rates in greater magnitudes than the BoE.

Persons: BoE, Ellie Henderson, BoE Governor Andrew Bailey, Jonathan Haskel, Catherine Mann, Megan Greene, Silvana Tenreyro, Stefan Koopman, Investec's Henderson, Jonathan Cable, Aditi Verma, Anitta Sunil, Ross Finley, Catherine Evans Organizations: Bank of England, Monetary, Committee, Rabobank, U.S . Federal, Fed, European Central Bank, Reuters, Thomson Locations: Investec

The Bank of England in February removed its explicit guidance and tied decisions to inflation data. The Bank of Japan, by contrast, still battling to raise perennially weak inflation, has left the core part of its guidance intact with a pledge to "patiently" sustain loose policies. The European Central Bank says it has adopted a "meeting-by-meeting" approach with "a strong preference against returning to outright forward guidance on policy rates." If the projections show the policy rate moving up later this year, officials will likely face questions if they do as expected and hold rates steady at the June meeting. If the rate is not seen moving up, they will face questions about not being responsive to recent data showing strong inflation despite pledging to be "data dependent."

Persons: Jerome Powell, BOE, Andrew Bailey, Powell, Ben Bernanke, Bernanke, Gregory Daco, Louis, James Bullard, Data's, Howard Schneider, Dan Burns, Andrea Ricci Organizations: Reserve Bank of Australia, Bank of Canada, Bank of England, Bank of Japan, European Central Bank, Louis Fed, Reuters, Thomson Locations: Central

☆ Bank of England set to raise rates to 4.5% next week, a possible peak
▼ + stars: | 2023-05-05 | by ( David Milliken | ) www.reuters.com time to read: +5 min

Economists polled by Reuters this week were unanimous that the BoE's Monetary Policy Committee (MPC) will raise rates to 4.5% next week, in sharp contrast to a poll two weeks earlier which showed only a slim majority expecting a hike. "Previously we had seen the MPC holding Bank Rate at 4.25% but the April labour market and March CPI inflation data were too much to ignore," said Peter Schaffrik, global macro strategist at Royal Bank of Canada. Only a minority of economists polled by Reuters this week expect the BoE to raise interest rates above 4.5% this year. But investors in interest rate futures - whose views shift more rapidly - see rates reaching 4.75% or 5% by September. "In our view, further tightening beyond May can't be ruled out," said Andrew Goodwin, chief UK economist at Oxford Economics.

☆ UK government and BoE weigh immediate access to cash after SVB collapse - Bloomberg News
▼ + stars: | 2023-04-27 | by ( ) www.reuters.com time to read: +1 min

April 27 (Reuters) - The Bank of England and Britain's finance ministry are considering reforms that would provide uninsured depositors with immediate access to their cash in the event of a bank failure, Bloomberg News reported on Thursday. Authorities were looking into whether some money could be released upfront, which would be covered by taxpayers based on how much cash uninsured depositors were likely to recover, Bloomberg said, citing government officials. Spokespeople for the Treasury and the BoE declined to comment. Bloomberg said discussions were at an early stage and a number of options on deposit insurance reform were being considered. Reporting by Chandni Shah in Bengaluru; Editing by Alison WilliamsOur Standards: The Thomson Reuters Trust Principles.

☆ Bank of England considering urgent reform of deposit guarantee scheme, Financial Times reports
▼ + stars: | 2023-04-16 | by ( ) www.reuters.com time to read: +2 min

The UK’s Financial Services Compensation Scheme is being urgently reviewed after the rapid failure of Silicon Valley Bank last month, the FT added citing people briefed on the matter. The failure last month of Silicon Valley Bank and two other lenders in the United States, along with the forced takeover of Credit Suisse by UBS sent banking shares globally into a tailspin, but markets have since calmed. BoE Governor Andrew Bailey said last week that the British central bank was considering improvements to its approach to depositor pay-outs for smaller banks with a focus on the speed of the pay-outs. "As with all things relating to bank resolution, there is no free lunch." Reporting by Mrinmay Dey in Bengaluru; Editing by Chizu NomiyamaOur Standards: The Thomson Reuters Trust Principles.

☆ Morning Bid: Nervy markets wait on inflation report, Fed cues
▼ + stars: | 2023-04-12 | by ( ) www.reuters.com time to read: +2 min

Investors will parse through the commentary to better understand the Fed's thinking about the turmoil in the banking sector, which had stoked expectations that the Fed may need to cut rates. But economic data along with rhetoric from Fed speakers have led markets to price in a two-thirds chance of a 25bp hike in May and standing pat thereafter, according to CME FedWatch tool. The consumer price index is expected to show core inflation rose 0.4% on a monthly basis and 5.6% year-over-year in March, according to a Reuters poll of economists. Switzerland's upper house had approved the rescue earlier on Tuesday, meaning the two chambers of the legislative body will vote again on Wednesday. Reuters GraphicsReuters GraphicsKey developments that could influence markets on Wednesday:Economic events: Inflation reports from Serbia, Hungary; Bank of Canada rate decision; U.S. inflation report; Fed minutesSpeakers: BOE Governor Andrew Bailey, ECB's Luis De GuindosReporting by Ankur Banerjee in Singapore; Editing by Edmund KlamannOur Standards: The Thomson Reuters Trust Principles.

LONDON, March 31 (Reuters) - Britain's digital banks will need support over the next few weeks and months to help them cope with the market fallout from the collapse of Silicon Valley Bank, a trade body representing UK fintechs said on Friday. A neobank, or digital bank, is a bank whose services are accessed via an app or website as opposed to having physical branches. He said that challenger banks - lenders which are usually smaller and newer than the big high-street banks - in Britain could be at risk. Hirt said that Innovate Finance has been offering "close support" to challenger banks to help them navigate the "turbulence" in the sector. BoE governor Andrew Bailey told lawmakers this week that the central bank was on alert amid the global turmoil, but added that Britain was not experiencing stress linked to the demise of Silicon Valley Bank.

☆ Bank of England says it is on alert after turmoil in banking sector
▼ + stars: | 2023-03-28 | by ( ) www.reuters.com time to read: +1 min

LONDON, March 28 (Reuters) - Top Bank of England officials said on Tuesday the central bank was on alert amid global turmoil in the banking sector but they also said Britain was not experiencing stress linked to the demise of Silicon Valley Bank and Credit Suisse. "I don't think that any, and we've said this, that any of these features cause stress in the UK banking system," BoE Governor Andrew Bailey told parliament's Treasury Committee. "This is why we have to remain incredibly vigilant," Deputy BoE Governor Dave Ramsden said. "We'll keep a close eye on bank funding costs, what the consequences of those could be for households and businesses, equally looking out for other risk factors, we have to remain incredibly vigilant." Bailey said the recent swings in the share prices of some banks showed investors were testing the sector.

Asia's economic data and policy calendar this week is light, which is perhaps just as well because investors' focus is firmly fixed elsewhere - the global banking crisis and what it means for growth, markets, and policy. Fears over deteriorating credit conditions are rising, despite the swift and bold action from U.S. and Swiss authorities. Fed and European Central Bank officials raised the warning flags on Sunday, echoing soundings from across the private sector last week. The turmoil and volatility across interest rates and fixed-income markets since Silicon Valley Bank was shuttered by California regulators on March 10 has been severe. Currency market volatility has been surprisingly subdued since the banking crisis flared up.

☆ Bank of England raises interest rates again, sees inflation falling
▼ + stars: | 2023-03-23 | by ( ) www.reuters.com time to read: +5 min

Sounding more upbeat about the outlook for the country's slow pace of economic growth, the BoE's nine rate-setters voted 7-2 in favour of a 25 basis-point increase in Bank Rate to 4.25%. "The MPC will continue to monitor closely any effect on the credit conditions faced by households and businesses, and hence the impact on the macroeconomic and inflation outlook," it said. On Wednesday, the U.S. Federal Reserve raised its main interest rates by a quarter of a percentage point, and indicated it was on the verge of pausing further increases. However, it said it expected wages to rise slightly less than it had previously forecast, as inflation expectations fell. The BoE was the first major central bank to start raising rates in December 2021 and until this week had seemed likely to join the Bank of Canada which this month stopped raising borrowing costs.

☆ Inflation shock puts Bank of England on course to raise rates again
▼ + stars: | 2023-03-23 | by ( William Schomberg | ) www.reuters.com time to read: +4 min

[1/2] A general view of the Bank of England (BoE) building, the BoE confirmed to raise interest rates to 1.75%, in London, Britain, August 4, 2022. Most economists had believed inflation was on course to fall steadily, after hitting a 41-year high above 11% in October. But Wednesday's data - showing inflation rising to 10.4% in February rather continuing its descent - immediately turned Thursday's announcement into an almost one-way bet on a quarter percentage-point increase in Bank Rate. As recently as Tuesday, investors were split almost 50-50 on whether the BoE would leave Bank Rate unchanged for the first time since November 2021. The European Central Bank last week stuck to its plans and raised rates by 50 basis points despite the Credit Suisse turmoil.

A 25 basis-point rise would take Bank Rate to 4.25%, where most economists said it would stay for at least a year. But investors have turned more doubtful about the BoE's appetite for more rate hikes in recent days amid mounting anxieties about the global banking sector. Interest rate futures on Friday showed traders were putting a roughly 50-50 chance on the BoE maintaining Bank Rate at 4% next week. Investors expect a 25 basis-point rate hike from the U.S. Federal Reserve on Wednesday, a day before the BoE's announcement. Forty-two of 47 economists polled by Reuters between March 13-16 expected the BoE to announce a 25 basis-point hike, hold Bank Rate at 4.25% for at least year and then lower it.

☆ ECB goes big on rates but bank turmoil clouds central banks' outlook
▼ + stars: | 2023-03-16 | by ( ) www.reuters.com time to read: +5 min

Overall, 10 big developed economies have raised rates by a combined 3,165 basis points (bps) in this cycle to date. Reuters Graphics3) CANADAThe Bank of Canada on March 8 became the first major central bank to halt monetary tightening during this cycle. Reuters Graphics6) NORWAYNorway's central bank meets next week and is expected to raise rates by 25 bps to contain above-target inflation. Reuters Graphics10) JAPANThe Bank of Japan, the most dovish major global central bank, maintained ultra-low interest rates at its March meeting, the final one for retiring BOJ governor Haruhiko Kuroda. The BOJ resisted changing its controversial yield curve control policy, which it uses to cap interest rates on longer-term debt.

☆ Bank of England says insurers more likely to fail if capital cut rule goes ahead
▼ + stars: | 2023-03-06 | by ( Huw Jones | ) www.reuters.com time to read: +2 min

LONDON, March 6 (Reuters) - Britain's proposals to loosen capital rules for insurers will increase the chances of an insurance company failing by 20% in a given year, the Bank of England has told lawmakers, reiterating its caution over the government's plan. Following Britain's departure from the European Union, its finance ministry has proposed easing capital requirements for insurers to unlock billions of pounds for investing in infrastructure to boost the economy. Easing the so-called Solvency II rules inherited from the EU is seen as a key "Brexit dividend" for the financial sector, and the ministry overrode warnings from the Bank of England, saying policyholders would still be protected. The BoE will implement the ministry's proposed reforms of Solvency II if approved by parliament, Bailey said. ($1 = 0.8335 pounds)Reporting by Huw Jones; Editing by Susan FentonOur Standards: The Thomson Reuters Trust Principles.

☆ Britain's Tesco raises store workers pay by 7%
▼ + stars: | 2023-02-20 | by ( ) www.reuters.com time to read: +1 min

LONDON, Feb 20 (Reuters) - Tesco, Britain's biggest retailer, will raise the hourly pay rate for store workers by 7% from April, another increase that will likely catch the attention of the Bank of England, which is worried about inflationary pressure in the economy. The supermarket group, one of the country's largest private sector employers, said store workers will get 11.02 pounds ($13.25) an hour from April 2, up from 10.30 pounds currently. Tesco (TSCO.L) said the increase, a third in ten months, will cost it over 230 million pounds. 3 supermarket chain, announced a 10% pay rise for its staff. ($1 = 0.8315 pounds)Reporting by James Davey, Editing by Kylie MacLellanOur Standards: The Thomson Reuters Trust Principles.

☆ UK firms plan biggest pay rises since 2012 to fill staff gaps
▼ + stars: | 2023-02-13 | by ( Suban Abdulla | ) www.reuters.com time to read: +2 min

Expected median annual pay awards in 2023 rose to 5% - the highest since CIPD records began in 2012 - from 4% in the previous three months. The survey also showed the gap between public and private employers' wage expectations widened. Planned pay settlements in the public sector fell to 2% from 3% in the quarter before, compared to 5% in the private sector, the CIPD said. The results highlighted the squeeze on living standards as key workers including nurses, teachers and public transport staff stage a series of strikes over pay and work conditions. BoE Governor Andrew Bailey last week expressed concerns about wage-setting, despite signs that the surge in inflation has turned a corner.

☆ Bank of England misses gilt auction sales target for first time
▼ + stars: | 2023-02-09 | by ( David Milliken | ) www.reuters.com time to read: +2 min

The bank's QE gilt holdings now stand at 825 billion pounds, down by 50 billion pounds from their peak in December 2021. In the first three months of 2023 it plans to sell 9.75 billion pounds of short-, medium- and long-dated gilts. Overall, the central bank is seeking to reduce its gilt holdings by 80 billion pounds over 12 months, split roughly equally between outright sales and maturing gilts. Earlier on Thursday, before the auction, BoE Governor Andrew Bailey told a panel of lawmakers that he had not seen any evidence of market disturbance from the central bank's QT sales. Under the terms of the its QT auction programme, the BoE has the option of selling less than the amount planned at a particular auction if it receives unattractively low bids.

☆ Britain presses on with proposals for a digital pound
▼ + stars: | 2023-02-06 | by ( ) www.reuters.com time to read: +3 min

[1/2] Pound coins are seen in the photo illustration taken in Manchester, Britain September 6, 2017. BoE Governor Andrew Bailey said the implications of a digital pound - including privacy issues - had to be considered. Prime Minister Rishi Sunak asked the BoE to look into the case for a CBDC when he was finance minister in 2021. Unlike cryptoassets, the digital pound would be issued by the central bank and not the private sector and its value would be fixed. Instead they would have accounts with private digital wallet providers, which would provide digital pounds over public infrastructure.

☆ What is Bank of England watching as it considers peak in rates?
▼ + stars: | 2023-02-06 | by ( Andy Bruce | ) www.reuters.com time to read: +3 min

At a news conference on Thursday, BoE officials outlined the economic indicators they will be watching most closely as they weigh up whether to raise rates again, or leave them at 4%. Official wage growth data also shows record growth in private sector earnings, excluding the coronavirus pandemic period when pay was distorted by government support. Long-run inflation expectations, as measured by the Citi/YouGov survey, have returned within touching distance of their pre-pandemic norm of just above 3%. The strength of inflation in services - which largely reflects domestic price pressures, unlike goods which are typically imported - is one source of unease. Members of the Monetary Policy Committee see that data as a gauge of underlying inflation in the economy.

☆ Bank of England and Treasury think UK is 'likely' to need digital currency, the Telegraph reports
▼ + stars: | 2023-02-04 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 4 (Reuters) - The Bank of England (BoE) and Britain's finance ministry think the UK is likely to need to create a central bank digital currency (CBDC) later this decade, the Telegraph newspaper reported on Saturday, citing an unreleased government report. The BoE declined to comment on the Telegraph article, but said a joint consultation on CBDC issues would be published shortly. BoE Deputy Governor Jon Cunliffe is due to give a speech on Tuesday to update the finance industry on the BoE's CBDC work. The European Central Bank is working on a digital version of its currency and is in the process of outlining the broader design. Last month it said it would not offer personal bank accounts but would allow person-to-person payments.

LONDON, Feb 3 (Reuters) - For all intents and purposes, financial markets think the brutal central bank tightening cycle is done. That may seem like a leap of faith after 36 hours in which three major central banks lifted their main policy interest rates yet again - and warned of more to come. Elsewhere, the Bank of Canada already signalled last month that it's pausing its rate rises. Jason Draho, head of asset allocation Americas at UBS Global Wealth Management, reckons "there's little investment value in over-analyzing a central banker's mindset." And if the central banks themselves seemed inclined to allow markets to do their own thing this time around, then it was left to the IMF to act as head teacher.

☆ Morning Bid: Let it go
▼ + stars: | 2023-01-16 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Anshuman DagaThe land of rising yields is the No. 1 focus of investors on Monday, as Japan's central bank may again let its bond-market peg go higher. Global inflation data due this week could underscore investors' expectations that the worst of the global price squeeze is over. A final read of euro zone inflation for December, as well as readings from Britain, Canada and Japan are due. Core inflation in all four regions is mostly rising and above target but the worst may have passed.

LONDON, Jan 16 (Reuters) - Britain's proposed changes to capital rules for insurers could lead to the government having to bail out policyholders, as happened 20 years ago after the near-collapse of life assurance company Equitable Life, the Bank of England said on Monday. "I will mention Equitable Life ... it can happen," Bailey added . Equitable Life, established in 1762, closed to new customers in 2000 and almost collapsed after making unsustainable guarantees to policyholders. The government, however, had made its decision on insurance reform and there was a need to move forward now, Woods said. The BoE wanted to be "very closely engaged" on the detail of those reforms, Woods said.

☆ UK names ex-Fed official Kroszner to BoE's Financial Policy Committee
▼ + stars: | 2022-12-21 | by ( David Milliken | ) www.reuters.com time to read: +1 min

LONDON, Dec 21 (Reuters) - Former U.S. Federal Reserve official Randall Kroszner will join the Bank of England's Financial Policy Committee (FPC) as a part-time external member for three years starting in February 2023, Britain's finance ministry said on Wednesday. "His leading academic voice in macroprudential policy ... and his experience at the Federal Reserve during the global financial crisis will be of real value to the committee," finance minister Jeremy Hunt said. The 13-member FPC monitors risks to Britain's financial system and sets capital buffers for British banks and maximum loan-to-income ratios for mortgage lending, as well as giving more general supervisory guidance. Bailey welcomed Kroszner's "significant international policy experience and extensive research on the financial sector". The committee has four scheduled meetings a year, but convenes more often at times of financial market stress.

☆ King Charles III bank note designs unveiled
▼ + stars: | 2022-12-20 | by ( ) www.nbcnews.com time to read: +1 min

The Bank of England unveiled its first bank notes featuring King Charles III on Tuesday, which will enter into circulation from the middle of 2024 to gradually replace those featuring his mother Queen Elizabeth II. Charles became king in September following the queen's death after 70 years on the throne. The new five, 10, 20 and 50 pound polymer bank notes feature a portrait of Charles on the front, as well as a cameo of him in the bank notes’ see-through security window, but are otherwise unchanged from their current designs. The queen first appeared on BoE bank notes in 1960, in contrast to British coins which have long featured images of the country’s rulers. Britain’s Royal Mint began issuing the first coins featuring Charles’s profile into general circulation on Dec. 8.

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