Welcome to Extreme Investor Network, where we provide you with in-depth analysis and insights into the latest news in the stock market, trading, and financial world. Today, we are diving into the recent decision by the Bank of England (BoE) and its impact on the UK economy and currency.
In a recent 8-1 majority vote, the BoE decided to keep the Bank Rate on hold at 5.0%, with only one member voting for a 25bp cut. This decision comes after a 25 bp reduction in August, marking the first rate cut since 2020. Additionally, the Committee unanimously agreed to decrease government bond purchases by £100 million over the next 12 months.
Following the announcement, GBP saw a bid against major G10 currencies, with GBP/USD reaching year-to-date highs just above US$1.33. BoE Governor Andrew Bailey emphasized that the economic outlook is progressing as anticipated, and any future rate cuts would be implemented gradually to ensure that inflation remains low.
Speaking of inflation, UK CPI inflation remained unchanged in August, with headline inflation sitting at +2.2% year-on-year, slightly above the BoE’s target of 2.0%. Core and services inflation both saw increases, with services inflation posing a challenge for the central bank. However, it’s important to note that the rise in services inflation was mainly driven by base effects.
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