Today at 14:00 we expect the Bank of England's decision on interest rates. The slow pace of wage growth and the lack of balancing indicators will likely cause voters to leave interest rates at the current 0.25%. Expectations for the vote are 7 against 2 in favor of maintaining interest rates. Michael Saunders and Ian McCafferty are likely to support an increase of 25 basis points. Keeping the buyout of assets at the level of 435 billion pounds is likely to pass by 9 to 0 votes. In the minutes of the BoE meeting, we can expect a statement that the economy is moving inline with August's inflation report, as the committee's monetary policy tightening expectations outweigh those of investors.
Keeping interest rates at current levels of 0.25% is likely to result in short-term GBP correction, but more importantly for investors will be the minutes of the meeting. New comments on tighter monetary policy will be very positive for the pound and we can see a new serious upward impulse.
The graph shows the slowdown in wage growth in the UK, which may cause BoE to refrain from raising interest rates in a longer term.
Economic indicators do not show recovery in the United Kingdom:
Policy makers sentiment:
Source: Bloomberg Pro Terminal
Trader Nikolay Georgiev
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