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- Preview: Bank of England Rate Decision
News & AnalysisOn Monday, UK Chancellor Phillip Hammond announced its latest budget, which did not have a massive impact on Pound Sterling. Now that is out of the way; it’s time to focus on another critical economic event – the Bank of England rate decision. The decision is set to be announced at 12:00 PM London time on Thursday.
About Interest Rates
Interest rates are set by the Bank of England’s Monetary Policy Committee which is made of nine members – The Governor, the three Deputy Governors for Monetary Policy, Financial Stability and Markets & Banking, the Banks’ Chief Economist and four external members appointed directly by the Chancellor.Bank of England has an inflation target of 2% (currently 2.4%), which is set by the Government and the Bank of England’s monetary policy is set to achieve the Government’s target.
If the Consumer Price Index (CPI) inflation rate is more than 3% or less 1%, the Governor must write a letter to the Chancellor to explain why and outline how they will get the inflation to the target of 2%.
Expectations
We have seen two rate hikes from the Bank of England in the last year, one in November 2017 and August of this year. The current interest rate stands at 0.75%, and according to the latest forecast, we will not see the Bank of England raising the rates in its upcoming meeting.After the announcement, all eyes will be on the Bank of England’s Governor Mark Carney press conference with his latest outlook on the British economy and Brexit. The Governor recently mentioned that a limited and gradual series of interest rate hikes are required to keep the inflation in check. The markets are expecting a potential hike in May 2019, after the United Kingdom formally leaves the European Union.
Other UK data to keep an eye on:
• Bank of England Asset Purchase Rate (12:00 London time)
Previous: £435 billion
Forecast: £435 billion• Bank of England Inflation Report (12:00 London time)
This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.
Sources: Go Markets MT4, Google, Datawrapper
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