November 13, 2021

BOE Will Take Drastic Measures? This Is What Experts Need To Know The Market!

 The Bank of England (BOE) is expected to be the first central bank to raise interest rates as early as next month based on analysis by some Reuters economists.

The BOE has taken a surprising step by taking steps to maintain interest rates in October. Based on a questionnaire conducted between November 8 and November 12, more than half think that interest rates can be raised as early as next year. If this happens, it will be the first December hike since 1994.

At this point the focus is on labor market developments in the UK and expect clearer indications at a meeting in December. According to Marchel Alexandrovich at Jefferies, “if both show good indications. The majority of MPC members think it would be nice to raise the rate by 15 basis points in December. However, if the December report is weak, then it is clearly better to maintain it. ”

Even so, economists view the move to raise interest rates as a double -edged sword.

So far, Britain’s economic recovery from the Covid-19 pandemic, lags behind other rich countries in the last quarter. Official data on Thursday showed GDP growth of 1.3%, the weakest growth in the third quarter since the country imposed a curfew.

The UK is facing additional Brexit problems that have exacerbated supply chain issues caused by the spread of the epidemic.

Hence BoE governor Andrew Bailey said last week the Bank would act if it saw higher inflation expectations driving up wages.