Reuters/Chris J Ratcliffe
Those decisions, alongside the bank’s quarterly Inflation Report — the three-monthly update of its forecasts for the British economy — will then be released at 12.00 p.m. on Thursday afternoon.
The BoE aggressively cut interest rates during the 2007-2009 period in order to cope with the shock brought to the British economy by the global financial crisis, but remained on hold for more than seven years after that. Between 2009 and August 2016 the base rate stayed at 0.5%.
It then dropped to 0.25% after the bank’s emergency cut in August, which intended to soothe the economy in the immediate aftermath of the vote.
However, in the nearly two months since the MPC last met, speculation has grown that the bank could use August’s meeting to hike rates back to 0.5%.
In June the MPC voted to hold at 0.25% by five votes to three, and while one of those voters, Kristin Forbes, has now left the bank, the macroeconomic picture during the start of the summer suggested that a hike could be on the cards in August.
At its simplest level, the policy dilemma facing Britain’s central bank is that it must balance surging inflation brought on by the weakened pound since the referendum, with the slowdown in the economy, dwindling consumer spending and declining inward investment.
Inflation had surged as high as 2.9% in April and May, but moderated in June, dropping to 2.6%. This, many in the markets believe, has all but ended any chance of a hike this week.
Business Insider rounded up forecasts strategists, analysts and economists from banks, asset managers, and research houses to get a picture of how the City of London expects Thursday’s vote to go down.
Check them out below.
Leave a Reply
Leave a Reply
This site uses Akismet to reduce spam. Learn how your comment data is processed.
