The Bank of England (BOE) will announce its latest decision on monetary policy tonight.
However, no new economic projections will be released, instead they are expected to be released in August. BOE Governor Andrew Bailey will also not speak following the policy announcement.
The market now expects that the Monetary Policy Committee (MPC) will keep current interest rates and bond -buying programs unchanged.
At its May policy meeting, the BOE announced to reduce its weekly asset purchase rate from £ 4.4 billion to £ 3.4 billion. Following that, the market now does not expect the BOE to reduce it further.
The market will keep an eye on how the MPC will react to the UK inflation rate hike which has soared above the central bank’s 2% target in May.
The reopening of more economic activity in England has pushed the Consumer Price Index to rise up 2.1% year -on -year in the past month.
If the BOE statement tonight indicates the possibility for any action against this rise, the pound has the potential to strengthen.
However, given that some sanctions measures in the UK still have to be implemented until July 19 due to the threat of the Delta variant, the BOE is likely to be more cautious in its statements.
