The Bank of England is expected to hold interest rates steady and make no changes to its asset purchasing program when it gathers Thursday for its September Monetary Policy Committee meeting.
The central bank is set to keep interest rates at a record low of 0.25 percent and maintain its quantitative easing (QE) program at a rate of £435 billion ($573 billion), despite inflation remaining at persistently high levels.
The fall in sterling following the U.K.'s vote to leave the European Union has pushed up the cost of imports, making goods more expensive for British consumers. This has resulted in higher inflation, which hit 2.9 percent in August, well above the Bank of England's target of 2 percent.
Ordinarily, this higher inflation would prompt the central bank to hike interest rates. However, the anticipated slowdown in the U.K. economy following Brexit leaves the bank reticent to make such moves, predicting that inflation will soon fall.
In July, the stubborn metric showed signs of relenting, slipping to 2.6 percent, though Bank of England Governor Mark Carney said in August that inflation is likely to first track higher before dipping. The bank has said it anticipates inflation will hit 3 percent in October.
Carney added that two interest rate hikes could be expected over the coming three years – one more than previously expected – though he cautioned that the first is unlikely to occur until the third quarter of 2018, once inflation stabilizes.
Source: Bloomberg Pro Terminal
Trader Bozhidar Arabadzhiev
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.