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BoE no longer expects to cut interest rates again this year

Thursday, Nov 03 2016
BoE no longer expects to cut interest rates again this year

The Bank of England said it’s no longer expecting to cut interest rates again this year and indicated that concern about accelerating inflation may even warrant tightening at some point. With the pound’s weakness pushing up inflation faster than anticipated, Governor Mark Carney and the Monetary Policy Committee said that had “adversely affected” how they balance the needs of the economy. Having lowered interest rates in August in response to the Brexit vote, the committee said its previous guidance on the likelihood of another cut had “expired.”

The central bank now sees consumer-price growth rising above its 2 percent goal early next year and staying above that level right through its forecast period. It said inflation will be at 2.5 percent in late 2019, the biggest three-year overshoot it’s ever predicted. There are “limits to the extent to which above-target inflation could be tolerated,” the MPC said as it kept its benchmark interest rate at 0.25 percent and its QE program unchanged.

 

Sterling is currently being traded around 1.2480 handle. Pair is likely to find support around 1.24 area and resistance above 1.2550 level.

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