Sterling Falling as the Bank of England Expects Inflation in Excess of 3%
- Payments , Banking
- 24.06.2021 03:04 pm
Commenting on sterling falling as the Bank of England expects inflation in excess of 3%, Olivier Konzeoue, FX Sales Trader at Saxo Markets, said: “The BoE chose to maintain accommodative measures in place, keeping the Benchmark Interest Rate at 0.1% and holding government asset purchases at GBP 875Bln, whilst outgoing chief economist Haldane was the only dissenter voting against keeping the bond-buying program unchanged (8-1 split on the topic).
“The MPC used similar rhetoric to that used by the US Fed of late, describing an expected peak in inflation in excess of 3% (versus 2.47% previously) as likely temporary in nature and flagged the uncertainty around the labor market outlook with close to 1.5 Million people still receiving wages through the furlough scheme. This justifies pushing back a potential 15Bps rate hike to August 2022, instead of June 2022, in order to avoid undermining recovery by a “premature tightening in monetary conditions”.
“GBP fell to session lows around 1.3906 after the announcement and hovers around the 1.3920 mark, whilst UK 10-year yields dropped 3Bps to 0.75% from 0.78%.”