(Bloomberg) -- Two of the Bank of England’s most ardent hawks withdrew their support for interest rate hikes, as the UK’s central bank voted for a fifth...
-- Two of the Bank of England’s most ardent hawks withdrew their support for interest rate hikes, as the UK’s central bank voted for a fifth-straight meeting to keep policy unchanged.Switzerland Surprises With Rate Cut, Moving Ahead of ECB and FedCatherine Mann and Jonathan Haskel joined an 8-1 majority on the Monetary Policy Committee to keep rates at a 16-year high of 5.25%, the latest sign that the BOE was edging toward easing policy later this year.
Traders ramped up bets for rate cuts this year, fully pricing in three-quarter point reductions for the first time in a month. UK bonds extended gains and the pound fell after the decision. The yield on two-year gilts was down 11 basis points while Sterling traded 0.4% weaker at $1.2738.Investors anticipate the first BOE rate cut in August but believe there is a more than a two-in-three chance of a move in June.
“We’re not yet at the point where we can cut interest rates, but things are moving in the right direction,” said Bailey in a statement released wuth the decision. “In recent weeks we’ve seen further encouraging signs that inflation is coming down. We’ve held rates again today at 5.25% because we need to be sure that inflation will fall back to our 2% target and stay there.”
Since the BOE’s last meeting, official data has shown the UK suffered a shallow technical recession in the second half of 2023. “The plan is working to bring inflation down, but we must not be complacent,” Hunt said. “While external cost pressures have lessened, domestic inflation pressures remain more persistent.”
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