BOE keep rates on hold, unexpectedly

Good morning everyone,

 

Yesterday saw the Bank of England policy-makers once again hold off from raising interest rates, weakening Sterling.

Speculation prior to the meeting was suggesting that updated forecast for growth and inflation would support Sterling overall but this was not the case. Forecasts contained in the Bank's Inflation Report showed downgrades to both economic growth and inflation forecasts which suggests to currency markets that economic data will have to show notable improvements over coming months in order for the Bank of England to start considering raising interest rates once more.

The decision to leave interest rates unchanged left markets unsure whether the BoE will raise rates later this year. Any comments today from Bank officials will receive particularly close attention in the coming days and weeks.

Today seems likely to be a quiet end to the week with no significant new economic data in either the Eurozone or the UK.

 

In the US, May’s University of Michigan’s consumer sentiment survey is expected to show confidence is still close to its fourteen-year high. Also, of interest will be whether the survey’s readings of inflation expectations tick up in response to the recent rise in the CPI. Meanwhile, the April import price index will provide an indication of the extent to which the recent rise in the oil price is likely to boost US inflation.

 

 

 

 
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