{"id":43740,"date":"2023-08-02T22:13:35","date_gmt":"2023-08-03T02:13:35","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/the-bank-of-england-will-likely-follow-the-fed-but-its-work-is-far-from-done\/"},"modified":"2023-08-02T22:13:37","modified_gmt":"2023-08-03T02:13:37","slug":"the-bank-of-england-will-likely-follow-the-fed-but-its-work-is-far-from-done","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=43740","title":{"rendered":"The Bank of England Will Likely Follow the Fed. But Its Work Is Far From Done."},"content":{"rendered":"
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The Bank of England is set to match moves from fellow central banks with a quarter-point interest-rate hike this week, but its work in taming inflation remains far from finished\u2014and investors should still brace for a hawkish surprise.<\/p>\n

While the Federal Reserve and European Central Bank raised rates by 25 basis points last week both of those central banks have signaled that their work is nearly done and will be data-dependent. That amount is also the consensus for the Bank of England\u2019s move on Thursday.<\/p>\n

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But inflation continues to run hot in the U.K., and despite recent signs that price-growth is slowing, wages remain a pressure that could prompt Governor Andrew Bailey and the BOE\u2019s Monetary Policy Committee to strike a tougher tone on Thursday.<\/p>\n

\u201cWith most major central banks already seen ending or approaching the end of their tightening campaigns, the only one standing out is the Bank of England,\u201d said Charalampos Pissouros, an analyst at broker XM.<\/p>\n

The U.K. has grappled with the worst inflation among the Group of Seven countries, though recent data showed an encouraging moderation of the consumer price index (CPI) in June. This means the BOE\u2019s 14th-consecutive rate hike is unlikely to be another surprise 50-basis point or half-point increase. <\/p>\n

\u201cWith inflation unexpectedly slowing more than expected in June to 7.9% it could be argued that the pressure \u2026 to hike by another 50 basis points has eased,\u201d said Michael Hewson, an analyst at broker XM. \u201cThe fly in the ointment for the Bank of England is the rather thorny issue of wage growth which has moved above core CPI, and could prompt the Monetary Policy Committee to err more toward the hawkish side of monetary policy and raise rates by 50 basis points.\u201d<\/p>\n

Alongside the usual rate decision, monetary policy statement, and meeting minutes, the BOE will also release on Thursday a package of quarterly forecasts covering inflation and economic growth that will be closely watched by investors.<\/p>\n

\u201cThere shouldn\u2019t be too much difference with the prior projections,\u201d said Jamie Dutta, an analyst at broker Vantage. \u201cFor some time, the Bank\u2019s models have predicted forecast inflation below target in two years\u2019 time and rate expectations have gone higher since May. That means [BOE Governor Andrew Bailey] could simply reiterate that future hikes will happen if \u2018persistent\u2019 inflation continues.\u201d<\/p>\n

Write to Jack Denton at jack.denton@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

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

The Bank of England is set to match moves from fellow central banks with a quarter-point interest-rate hike this week, but its work in taming inflation remains far from finished\u2014and investors should still brace for a hawkish surprise. While the Federal Reserve and European Central Bank raised rates by 25 basis points last week both […]<\/p>\n","protected":false},"author":1,"featured_media":43741,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-43740","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nThe Bank of England Will Likely Follow the Fed. 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