Less than three hours, the Bank of England will announce monetary policy developments and interest rates, as expectations indicate that the bank will raise interest rates by 25 basis points to reach 1.25%.
The bank is heading to increase interest rates for the fifth time in a row after the bank raised interest rates at every meeting this year to counter the effects of high inflation, as it is expected that interest rates will reach Thursday to their highest levels since January 2009.
There are some members who want a stronger intervention and a 50 basis point rate hike after inflation topped 9% in April (the highest level since 1982) with expectations that it will cross 10% before it starts to decline, but the expected recession fears for the UK may force them to accept a rate Lifting 25 basis points.
And the British economy unexpectedly contracted in April, according to figures released at the beginning of the week, by 0.3% on a monthly basis, in addition to the weak employment data and high unemployment rates that were released on Tuesday, which exacerbated the fears of an economic recession, which will put pressure on the members of the Bank in today’s meeting.
Therefore, the bank is under strong pressure, especially after the US Federal Reserve moved yesterday, raising interest rates by 75 basis points, and it has to raise interest rates from the Bank of England by 25 basis points, which will not affect the rise in inflation. At the same time, the bank does not have the flexibility to raise it by 75 basis points after the economy contracted in April.
. A report issued by the Organization for Economic Cooperation and Development at the beginning of the week revealed that the United Kingdom is about to enter a state of economic recession, and that the British economy will be the worst in the developed world, with the exception of Russia, next year 2023.
The interaction of the sterling pound would be stronger if the bank surprised the markets and raised interest rates by 50 basis points, but in the event of the hike, it came as expected by 25 basis points. It is not expected that the pound sterling will react strongly unless the interest and monetary policy statement is positive for the future of interest.
02/11/2024
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