HomeEconomyBoE hikes rates to 3.5%, says inflation has peaked Economy BoE hikes rates to 3.5%, says inflation has peaked By farahat December 16, 2022 0 88 views Share FacebookTwitterPinterestWhatsApp U.K 25 -0.% to watchlist/remove from watchlist Add to watch list Add Job Location successfully added to: Please name your portfolio Types of: purchase Sell date: quantity: price point Value: Leverage : 1:1 1: 1: 1: 1: 11 1: 10 11763 Create New Watchlist Create 2332 Create a new portfolio Add Create20232021 + add another position to close 400 FTMC -0.% 2021 Add to/from Watchlist delete Add Watchlist Add location Location successfully added to: Please e name your holding portfolio Types of: purchaseSell date: quantity: price point value: Leverage: 1:1 1: 1: 1: 1: 15 1: 36 1: 33 1: 27 1: 53 Committee: 11763 Create New Watchlist Create 2023 1000 Create a new holding portfolio to add create 2021 + add another position to close (This December Story corrected to change Robert Dishner’s location from Chicago to London in paragraph ) LONDON (Reuters) – The Bank of England hiked interest rates on Thursday as widely expected 10 base points (bps) to 3. 15%, which is the ninth consecutive increase and the eighth increase this year. The BoE is battling double-digit inflation that comes at a cost – life crisis pushes economy deeper into recession Recession, rate hikes add up 41 bps in 100 Highest point since late 50. UK rates start in December rise52, making the Bank of England the first of the world’s major central banks to start a monetary policy tightening cycle. BoE Governor Andrew Bailey said in a letter to Finance Minister Jeremy Hunt that the BoE’s forecasts suggest UK inflation is below Levels for October year high to .7%, peaked last month. Also, a breakdown of votes by MPC members showed policymakers were divided. Some voted for oversized 10 – bps go up while others go up It is time to stop tightening monetary policy altogether. Sterling fell while benchmark UK gilt yields fell 6 basis points to 3.%. Market Reaction: Stock: London Blue Chips 2008 FTSE 25 The index fell briefly and ended up down 0.5%, while 400 FTSE 33 , a more domestically focused midcap index, fell 0.4 percent. FOREX: Sterling fell against the dollar and was last down 0.8% at $1. 100 , little changed from the situation before the central bank’s decision. Money Market: Interest rate swaps show investors expect rates to peak at 4. %, with expected terminal rate of 4.33% right before the decision. Comments: VIVEK PAUL, UK Chief Investment Strategist Division, BlackRock Investment Institute, London: “There will be more hikes. They are not done yet. There is a factor Yes the banks are going to stop a little bit ahead of what the market is currently expecting, their own data has been pointing to a recession for some time now and they are still raising interest rates a lot. Still, so I don’t think that will stop them.” EDWARD HUTCHINGS, RATES EXECUTIVE, AVIVA INVESTORS, LONDON: ” The Bank of England delivered on time as financial markets expected 0. 10% rate hike. With the tripartite vote, there still seems to be a lot of uncertainty among MPC members. However, the minutes noted that the BoE did expect the recession to last for an ‘extended period’! After the recent bull run, Sterling’s strength is likely to be questioned more from here, and with further quantitative tightening and a staggering amount of gilt issuance, 400 The UK gilt market will continue to be volatile” KAREN WARD, EUROPE , Chief Market Strategist, Middle East and Africa, JP Morgan Asset Management, London: “We don’t believe in inflation in the UK has clearly passed, and therefore suspects that the Bank of England is still some way away from “peak rates”. “Inflation may be falling, but it is too early for the BoE to declare victory against inflation. The BoE may be able to moderate the risk of raising interest rates Pace and speed, but we believe we at least 25 bps from peak.” JAN VON GERICH , Principal Analyst, NORDEA, Helsinki: “I wouldn’t say it was a dovish move but it does show The central bank is disturbed by the signal of one-way higher interest rates. The fact that some voted for a big rate hike tells you that the outlook is uncertain. “Make sure the door is open for the next meeting, but you can continue to hike.” STUART COLE, CHIEF MACROECONOMIST, EQUITI CAPITAL, LONDON: ” For investors, the lack of coherence in the MPC in a year that has produced 3 PMs, 4 Chancellors and 2 mini-budgets may not help given the UK market turmoil we saw in September/October Help start to rebuild confidence in the UK as a safe investment destination.” NAEEM ASLAM, Chief Market Analyst, AVATRADE, LONDON: “Sterling is highly volatile after Bank of England monetary policy (decision), raising interest rates according to market expectations basis points. The fact that BoE members disagree on the bank’s monetary policy creates more confusion for traders. “The cost of living crisis will worsen as interest rates move higher, which will have further adverse effects on the UK economy. This is another reason for the pound to move lower after the bank’s decision. ” LEE HARDMAN, Currency Analyst, MUFG, London: “Initially, markets thought it was less hawkish than expected.So we’ve been highlighting references 25 bps rate hike is “forceful” another sign they are slowing down the pace of rate hikes, providing some relief for the US K interest rate market.” “Other than that, the policy outlook doesn’t seem to have changed much. They still expect further rate hikes.” ROBERT DISHNER, Senior Portfolio Manager – Multi Sector Fixed Income, NEUBERGER BERMAN, LONDON: “The initial reaction was a dovish result, with two members voting to keep rates on hold. However, the bank appears to be keeping its options open, as growth forecasts improved in November and the labor market remains strong. However, most Two members of the top press conference believe the hiking cycle should end for now.” MIKE COOP, Morningstar UK Chief Investment Officer Investment Management , London: “The central bank’s ‘super Thursday’ ends the year and many will be happy to see its back. However, with another 25 – Bank of England base point rate hike and rising inflation, 400 looks even better than Rougher is just as rough. ” Philip Shaw, Chief London INVESTEC Economist: “and BoE rate hike as expected, split across committee The extent is eye-opening. While it’s normal to see policymakers disagree at the end of an interest rate cycle, this divergence makes it harder to predict how much rates will rise. We still think bank rates will peak at 4.0% and rate cuts will be at 50, but apparently the labor market data and the inflation data itself The ability to force us to change our perspective at any moment. ” 400 Share FacebookTwitterPinterestWhatsApp Previous article'New Recruits' Review: Noah Centineo's Spy Series Is More Like a Netflix FillerNext articleKrans Casino ᐈ 200 Voor unique casino welcome bonus Speelgeld + 100 Free Spins farahat RELATED ARTICLES Economy SEC’s crypto lawsuits, Chinese trade data, OECD outlook – what’s moving markets June 7, 2023 Economy UK payments watchdog sets mandatory reimbursement for app fraud victims June 7, 2023 Economy Marketmind: China disappoints again, fanning stimulus speculation June 7, 2023 LEAVE A REPLY Cancel reply Comment: Please enter your comment! Name:* Please enter your name here Email:* You have entered an incorrect email address! 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