BOE raises bank rate by 25 bps to 4.50%, as expected

  • Prior 4.25%
  • Bank rate vote 7-2 vs 7-2 expected (Dhingra, Tenreyro voted to keep rates unchanged)
  • If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required
  • Risks to inflation forecasts skewed significantly to the upside
  • Pay growth could plateau at rates inconsistent with inflation target
  • Estimates „flat“ GDP for Q1 and Q2 (March forecast was -0.1% q/q for Q1)
  • Full statement

Of note, the BOE has revised their projections to show a higher path for inflation as well as a big bump in terms of GDP forecast. That’s a bullish take at least, with the rest of the decision and forward guidance being consistent with what is expected and what we have seen from the central bank previously.

GBP/USD has caught a jump from 1.2575 to a high of 1.2615 before hugging closer to the 1.2600 mark now. As much as there are bullish elements to the report, I don’t see this skewing the market pricing all too much as a 5.00% peak in the bank rate has already been nearly priced in beforehand.

This article was written by Justin Low at

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