At midday, the BoE announced UK interest rates are set to remain the current level of 0.5% for another year. Adding to the extremely dovish nature of the BoE report, Ian McCafferty the only member of the MPC who previously argued for a rate rise, dropped his vote once again as they unite in their vote 9-0, the first time since July last year. The Minutes of the meeting suggest that McCafferty thought that the pick-up in wage growth would be more muted than expected.
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Shortly after, we heard from Mark Carney at 12:30. He stated that “as one of the most open economies in the world, the U.K, cannot help but be affected by an unforgiving global environment and sustained financial market turbulence.” He went on to say that “we will do the right thing at the right time on rates.”
Growth forecasts were also revised lower. It is now expected that UK economy would grow only by 2.2% this year compared to 2.5% predicted during November last year. Growth in 2017 expected to be 2.4%, revised down from 2.7%. Sterling dropped to fresh lows of the day, but now back trading where we initially were before the announcement.
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