{"id":31855,"date":"2023-07-05T18:13:50","date_gmt":"2023-07-05T22:13:50","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/forex\/pound-stutters-as-debate-on-boe-rate-hike-path-heats-up\/"},"modified":"2023-07-05T18:13:51","modified_gmt":"2023-07-05T22:13:51","slug":"pound-stutters-as-debate-on-boe-rate-hike-path-heats-up","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=31855","title":{"rendered":"Pound stutters as debate on BoE rate hike path heats up"},"content":{"rendered":"
\n

Investing.com — The pound was largely unchanged against the dollar Wednesday, as the debate continued on how far the Bank of England needs to go to bring inflation under control, with some calling for just two more hikes, while others warning of several more hikes.\u00a0\u00a0<\/p>\n

fell 0.07% to $1.2702.<\/p>\n

\u201cWe continue to see two more hikes rather than the five priced which will remove some of the current yield support for the pound,\u201d MUFG said, downplaying expectations that BoE still has a ways to go to end its rate-hike cycle.<\/p>\n

The U.K overnight index swap (OIS) pricing in a further 130 basis points of tightening priced through to the turn of the year \u201cremains excessive,\u201d MUFG adds, and is likely to adjust lower as the markets see \u201cinflation come down.\u201d<\/p>\n

Falling food prices are likely to have the \u201cbiggest impact\u201d on short-term inflation expectations followed by a 17% drop in utility bills from the government\u2019s price cap on energy that came into force on July 1.<\/p>\n

Others, however, aren\u2019t so sure. JPMorgan sees the risk that the BoE could hike rates to 7% from the amid concerns that the BoE will struggle to bring inflation back to its 2% target.<\/p>\n

Despite the 18-month rate-hike cycle delivered by the BoE, consumers are benefitting from a rise in normal wages that has softened the blow from higher mortgage rates, it added. \u00a0<\/p>\n

As the BoE faces an uphill challenge to curb inflation, the central bank may be forced to turn more aggressive on rate hikes, pushing the economy into recession.<\/p>\n

\u201cA break in behavior, or hard landing, looks increasingly likely at some point over the next year if inflation is to be brought under control in the UK,\u201d JPMorgan said, according to a Bloomberg report.<\/p>\n

The growing debate on the BoE\u2019s path of rate hikes comes just weeks after the U.K. central bank delivered a surprise 0.5% hike following data that showed inflation was running hotter than expected.<\/p>\n

At the annual central bank meeting in Sintra, Portugal last week, however, BoE governor Andrew Bailey was tight-lipped when discussing market expectations for several further rate hikes.<\/p>\n

“The market\u2026thinks we’re nearly done at the moment. They’ve got a number of further increases priced in for us,” Bailey said,\u00a0“My response to that would be: ‘Well, we’ll see.'”<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Investing.com — The pound was largely unchanged against the dollar Wednesday, as the debate continued on how far the Bank of England needs to go to bring inflation under control, with some calling for just two more hikes, while others warning of several more hikes.\u00a0\u00a0 fell 0.07% to $1.2702. \u201cWe continue to see two more […]<\/p>\n","protected":false},"author":1,"featured_media":31856,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[244],"tags":[83],"class_list":["post-31855","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-forex","tag-featured"],"yoast_head":"\nPound stutters as debate on BoE rate hike path heats up | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Investing.com -- The pound was largely unchanged against the dollar Wednesday, as the debate continued on how far the Bank of England needs to go to bring\" \/>\n<meta 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