Published: Fri, June 16, 2017
Economy | By Annette Adams

Sterling jumps as rate rise support grows at Bank of England

Sterling jumps as rate rise support grows at Bank of England

Although inflation has spiked to 2.9 percent in May, the BoE's monetary policy committee (MPC) voted 5-3 to leave its benchmark rate at 0.25 percent, and the level of United Kingdom government bond purchases at £435 billion, and corporate bond buying at up to £10 billion. And so, the other members of the BOE's monetary policy committee voted to keep interest rates at a record low because they thought it was too early to tell if other areas of growth in the United Kingdom economy would be able to offset the slowdown in household consumption.

Despite the closeness of the June MPC vote, there still looks to be a very real possibility that the Bank of England will hold off from raising interest rates in 2017. "In fact she was joined by Ian McCafferty and Michael Saunders in believing intensifying inflationary pressures justify an immediate 25 basis point increase".

The BoE forecast inflation would surge further above its 2.0-percent target in the coming months.

"As it stands, five members voted to keep rates on hold, but today's vote shows the gap is narrowing". In the previous two MPC meetings only Forbes had voted for an increase.

The Bank of England is closer to raising interest rates for the first time in a decade than many had expected, with a growing number of its rate-setters appearing anxious about a spike in inflation that is eating into the living standards of the British. And they sounded upbeat on the prospects for exports and business investment to power growth while squeezed consumers take a breather.

The decision is based on the macroeconomic forecast, according to which, due to the supply side pressures, the inflation is expected to be above its target rate during 2017.

The minutes added that some policymakers felt it was time to start scaling back the massive package of support launched in the wake of last summer's referendum, which included a rate cut and more electronic money printing. The surprise result has raised doubts about Mrs. A slowdown in household consumption, and GDP as a whole, had recently begun, and it was too early to judge with confidence how large and persistent it would prove to be ...

Governor Carney expressed his thanks to Kristin Forbes, one of the rate setters in favor of lifting rates, for her final contribution before she steps down as a member of the Committee.

The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on June 14, 2017 and chose to keep the refinancing rate unchanged at 7 percent.

Precious metals miners Fresnillo and Randgold Resources were falling as gold prices declined following the Fed's interest-rate hike and more hawkish than expected tone last night. In fact, Thursday's interest rate decision vote had the biggest division in six years as expectations were calling for a 7-1 outcome in favor of keeping rates unchanged.

With the United Kingdom economy struggling, economic and political uncertainty magnified by the election result, and earnings growth very weak, a compelling case can still be made for the Bank of England to hold off from any interest rate hike. Such news does not bode well for the UK's economic future, especially when viewed in conjunction with the previous day's news that United Kingdom inflation is at a four-year high.

It warned that the inflation overshoot relative to the target could be more pronounced than previously thought.

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