What to expect from Bank of England’s Interest Rate Decision on November 2nd

October 31, 2017

FXPrimus's special report on BoE Interest Rate Decision, Thursday November 2.

What to expect from Bank of England’s Interest Rate Decision on November 2nd

This article is originally referred from FXPrimus Special Report

“As the latest GDP grew higher than the 0.3% that economists had anticipated (ac. 0.4%) and Unemployment Rate hit a 43-Year low back in July, BoE may be raising the interest rates in November; the first hike after a long period of 10 years.

Despite that, scarce capacity in employment remains a concern.

Policy makers must cautiously think as the UK’s economic performance largely depends on whether a transition deal with Europe is reaching or not.

With inflation hitting 3.0% YTD (est. 3.0%, target 2.0%), the highest level since April 2012, and the increased uncertainty over Brexit, the pressure on MPCs intensifies, especially when considering the 0.4% fall on real wages compared to last year.

The probability of a hike rate soared to 80% over the past few days in anticipation of curbing inflation and towards a path of gradual monetary normalisation, however, the UK’s economy has not been on its strongest footing and concerns over a weaker Pound weigh in.

On the contrary, at the latest MPC meeting the MPC votes increased to 2-0-7 (exp 2-0-7, prev 2-0-6), with more members voting to hold rates unchanged.

This estimate has now changed to 9-0-0, signalling that bond buying is likely to provide more yields to investors, albeit at the cost of tightening borrowing.

The risk to consumers still remains real and is one of BoE’s top concerns.

Original Source: FXPrimus Special Report

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