September 24, 2021

This Is A BoE Warning That Should Not Be Taken Lightly By ‘Traders’!

 The Bank of England (BoE) has decided to keep monetary policy unchanged and at the same time lower its economic growth forecast for the third quarter of the year.

BoE policymakers unanimously chose to leave its key interest rates unchanged at a low of 0.1% and maintain its asset purchase target of £ 875 billion ($ 1.2 trillion).

The central bank revised its UK GDP growth expectations for the third quarter by lowering the reading level from 2.9% to 2.5%. This decrease is due to the problem of supply constraints on output.

On inflation, the BOE warns that consumer prices tend to rise above 4% in the year which is double the targeted level. This is due to the worsening energy price shocks.

According to the BoE, rising wholesale gas prices on the spot and futures markets could bring increased risks to inflation projections. At the same time a large number of other cost pressure indicators remain high.

At the same time, the BOE reaffirmed its view that it expects inflation to fall back to the 2% target in the medium term. The sterling currency traded up 0.6% to a trading level of $ 1.3711 shortly after the policy decision.

Finally, some analysts are of the view that the BoE will raise interest rates as early as next year. Currently policymakers are in a wait -and -see phase.