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WHAT TO EXPECT FROM THE BANK OF ENGLAND ON THURSDAY

Harvest Global Markets :

The Bank of England can be titled “flag bearer” for adopting an aggressive monetary policy before the rest of the world. When Covid-19 trapped the world in its claws, England experienced an all-time low policy rate of 0.1%. In December 2021, when the deadly virus loosened its grip, the economies began to revive again; therefore, England’s central bank spiked its rate back to 0.25%. However, the year 2022 welcomed the world with a bomb explosion of the Russian-Ukraine Invasion which led to a serious supply crisis in food and fuel as Russia and Ukraine contribute a major chunk to international trade.

The food and fuel crisis caused inflation to infuriate in the economies, and England was no exception; as of now, Great Britain’s Year-on-Year inflation rate is hovering around 9.90% (highest amongst the great seven economies). To combat the deadly inflation, the Bank of England has hiked its policy rate by a total of 165 basis points over several successive instances, and the current interest rate of England stands at 1.75%.

England’s next monetary policy is anticipated to be released on Thursday, 22nd September, at 1600 HRS PKT. Investors have assigned a 60% probability for a 75 basis interest rate increase, while the other 40% sides another 50 basis point hike. England last adopted such fierce monetary policy in 1989. Moreover, markets analysts predict that England’s official rate may surpass 3.75% by the year-end and 4.5% by March 2023.

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