GBP/USD Drops Following Bank of England’s Indication of Fewer Future Rate Increases
- Shams ul Zoha
- February 2, 2023
- 6:23 pm
WHAT YOU SHOULD KNOW
- The Bank of England increased its benchmark interest rates by 50 basis points on Thursday.
- The Monetary Policy Committee (MPC) voted 7-2 to increase the main Bank rate by 0.5%, bringing it to 4%.
On Thursday, the Bank of England increased its benchmark interest rates by 50 basis points, as predicted, and revised some of its earlier pessimistic economic forecasts.
The Monetary Policy Committee (MPC) voted 7-2 to increase the main Bank rate by 0.5%, bringing it to 4%. The policy statement suggested that future meetings may result in smaller hikes of 0.25%. However, two members of the MPC voted against the rate hike, preferring to keep the rate unchanged.
At 12:15 GMT, the British Pound to US Dollar exchange rate was 1.2288, a decrease of 0.0085 or 0.68%.
The Bank of Canada has made a significant change in its rhetoric, no longer emphasizing the need to “forcefully” raise rates to control inflation. This is a major shift in the Bank’s approach to inflation management.
TThe Bank of Canada has made a significant change in its rhetoric, no longer emphasizing the need to “forcefully” raise rates to control inflation. This is a major shift in the Bank’s approach to inflation management.
The Bank of England has predicted that the Consumer Price Index (CPI) inflation rate will drop to approximately 4% by the end of the year, and that the decline in economic output will be less severe than what was forecasted in November.
According to the latest economic forecasts, the recession is expected to be shorter and less severe than initially anticipated.
The Bank of England had predicted that the United Kingdom was heading into its longest recession in history, yet GDP growth unexpectedly rose by 0.1% in November, following an even higher-than-anticipated rate of growth in October. This indicates that the impending recession may not be as prolonged or as severe as initially feared
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