• Email Us: [email protected]
  • Contact Us: +1 718 874 1545
  • Skip to main content
  • Skip to primary sidebar

Medical Market Report

  • Home
  • All Reports
  • About Us
  • Contact Us

Bank of England expected to keep rates steady as inflation risks mount

September 22, 2021 by David Barret Leave a Comment

September 22, 2021

By David Milliken

LONDON (Reuters) – Britain’s central bank looks set to keep interest rates steady later on Thursday as it approaches the end-point of its 895 billion pound ($1.22 trillion) asset purchase programme and casts a wary eye over surging inflation pressures.

Investors will be keen to see if more Monetary Policy Committee (MPC) members join external member Michael Saunders who voted in August to halt the current year-long programme of asset purchases, which the Bank of England committed to last November.

The BoE is ahead of other major central banks in planning to stop quantitative easing by the end of this year, and half its policymakers judged in August that some preconditions for an interest rate rise had already been met.

Late on Thursday, the U.S. Federal Reserve cleared the way to reduce its monthly bond purchases and signalled interest rate increases may follow more sooner than expected, with half of its policymakers projecting borrowing costs would rise in 2022.

In August the BoE revised up its forecast for inflation at the end of this year to 4%, reflecting higher energy prices and post-COVID-19 bottlenecks which have intensified this month.

Natural gas prices have surged across Europe in recent weeks, with knock-on impacts on household energy bills, industrial chemicals and even food supplies.

Key for the timing of policy tightening is whether the BoE starts to doubt that these price rises are temporary.

A particular concern is if rising inflation pushes up longer-term inflation expectations among the general public, leading to firms and workers factoring above-target inflation into future pricing decisions and wage demands.

A monthly survey from Citi on Tuesday showed the sharpest monthly rise in year-ahead inflation expectations in more than 15 years after August consumer price inflation hit a nine-year high of 3.2%.

“This print could tilt the balance of risks to the hawkish side for the MPC meeting,” Citi economists said. “More may join Michael Saunders in voting for an early end to asset purchases, and even dissent on Bank Rate cannot be ruled out.”

Two new policymakers join the MPC this month – former European Central Bank and Goldman Sachs economist Huw Pill, who replaces Andy Haldane as chief economist, and Catherine Mann, a former chief economist for the Organisation for Economic Co-operation and Development, who succeeds Gertjan Vlieghe.

Interest rate futures currently price in a more than 60% chance that the BoE will raise interest rates to 0.25% from 0.1% in February 2022, followed by another rate rise to 0.5% by the end of the year.

Most economists think the BoE will wait longer and raise rates only once next year.

While the BoE expects Britain’s economy will regain its pre-COVID-19 size in the final quarter of this year, a surge in coronavirus cases in July caused growth to slow to a crawl and business surveys suggest momentum has been hard to regain.

Moreover, furlough support payments for over a million workers end this month, as does a temporary increase in other welfare payments, squeezing households at a time when inflation is pushing up the cost of essentials.

($1 = 0.7340 pounds)

(Reporting by David Milliken; Editing by Aurora Ellis)

Source Link Bank of England expected to keep rates steady as inflation risks mount

David Barret
David Barret

Related posts:

  1. Athletics-Tamberi hopes to finish season on a high in Zurich
  2. Alleged victim of Madrid homophobic attack says injuries were consensual – Interior Ministry
  3. Tumblr’s subscription product Post+ enters open beta after much scrutiny from users
  4. JPMorgan Chase acquires college financial planning platform Frank

Filed Under: News

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

  • Adorable Boxer Crabs Filmed “Cloning” Their Living Anemone Gloves For The First Time
  • Watch An Adorable Little Crab Hitch A Ride On A Mosaic Jellyfish Through The Gulf Of Thailand
  • COVID Vaccines Saved An Incredible 2.5 Million Lives In The First 4 Years Of The Pandemic
  • NASA Has Made A Sizable Error In Lunar And Martian Physics, Study Suggests
  • Disappearing Stars In The 1950s Associated With UAPs And Nuclear Weapons Tests
  • These Are The “New Seasons” Scientists Think Are Emerging Because Of Climate Change
  • Sharks And Rays Have The Oldest Vertebrate Sex Chromosomes – And They’re Like No One Else’s
  • Extremely Rare Black Hole Type Caught Snacking On A Star 450 Million Light-Years Away
  • Extremely Rare Asian Golden Cat Captured On Camera Trap Slinking Through Thai Forest
  • Around 720 Million Years Ago, Our Planet Turned Into A Snowball Earth – Is This Why?
  • New Excitonic Quantum State Of Matter Could Lead To Radiation-Proof Self-Charging Computers
  • “Remarkable” New Species Of 340-Million-Year-Old Ancient Shark Discovered In World’s Longest Cave System
  • Non-Hormonal Male Birth Control Pill With No Side Effects Smashes Early Trial
  • JWST Reveals Dust Being Destroyed In The Galaxy’s Most Extreme Colliding-Wind Binary
  • Are There Body Parts You Can Live Without? Find Out More In Issue 37 Of CURIOUS – Out Now
  • New Study Unearths Humanity’s “Hidden” Crossings Out Of Africa
  • Trichonephila Clavipes: The Spider That Spins “Golden” Silk
  • The Southern Delta Aquariids And Alpha Capricornids Meteor Showers Will Dazzle The Skies Together Soon
  • Virus Found In Black-Eyed Pea Plants Could Be Used To Treat Cancer
  • Many People Have No Idea Where Oil Actually Comes From. It’s Not Dinosaurs
  • Business
  • Health
  • News
  • Science
  • Technology
  • +1 718 874 1545
  • +91 78878 22626
  • [email protected]
Office Address
Prudour Pvt. Ltd. 420 Lexington Avenue Suite 300 New York City, NY 10170.

Powered by Prudour Network

Copyrights © 2025 · Medical Market Report. All Rights Reserved.

Go to mobile version