Pound jumps as Bank of England hints at rate rise


Bank of England

The Bank of England has said that higher inflation and a pick up in growth could lead to a rate hike in “the coming months”.

Members of the Bank’s nine-strong Monetary Policy Committee voted 7-2 to keep interest rates on hold at 0.25%.

But the committee was talking in much stronger terms about an increase, analysts said.

The pound climbed nearly 1% against the dollar to $1.3314 after the Bank’s announcement.

It said the growth outlook was slightly stronger than it had predicted last month.

The nine policymakers on the panel believed “some withdrawal of monetary stimulus was likely to be appropriate over the coming months”.

It reiterated that rates may need to rise by more than expected in financial markets.

In minutes of its latest rates decision, the Bank said there was a “slightly stronger picture” for the economy since its forecasts last month thanks to signs of a firmer housing market, stronger employment and a rebound in retail and new car sales.

Inflation bump

Meanwhile, Brexit-fuelled inflation is set to climb above 3% in October – higher than the Bank previously expected.

Inflation is rising faster than the Bank’s policymakers had expected just a month ago.

The inflation rate increased to 2.9% last month, and the Bank expects it to rise above 3% in October, well above its 2% target level.

Two members of the Bank’s rate setting committee, Ian McCafferty and Michael Saunders, voted for the third meeting in a row to increase rates, arguing that inflation would continue to overshoot the target and a move now would prevent a sharper rise.

The rest of the nine-strong committee, including the Bank’s governor, Mark Carney, voted to keep rates on hold, saying that business investment, consumer confidence and consumption remained weak.

The Bank pinned the blame for the rise in inflation on the fall in sterling since the Brexit referendum, which has made imports more expensive.

In the past month, the pound has fallen by 1% against the currencies of its main trading partners.

View the original article: http://www.bbc.co.uk/news/business-41266528

The Bank also said the rising price of oil was adding to inflationary pressures.

In the same category are

Manus Island: Police enter former Australia-run asylum centre Image copyright AFP PHOTO / GetUp Image caption PNG authorities have given asylum seekers a deadline to leave, the former detainees say Police in ...
‘I asked to go to jail, rather than stay homeless’ Image caption Bradley's anti-social behaviour order prevents him from "loitering" near businesses Banned from begging and sleeping in shop doorway...
Life on London’s first Aids ward Image copyright Gideon Mendel Opened in 1987 by Diana, Princess of Wales, the Broderip, at the Middlesex Hospital, was the first Aids ward in London...
Christmas fraud: Mobiles and clothes top presents targeted Image copyright Getty Images People are being urged to beware of fake products and websites in the run-up to Christmas.Mobile phones, clothes, shoes...
Broadband firms must ditch ‘misleading’ speed ads Image copyright BT Image caption ISPs will no longer be able to use the term 'up to' about speeds of service Broadband firms will no longer be abl...
Budget 2017: MPs rally round Hammond after growth shock Image copyright PA Conservative MPs have rallied round Philip Hammond despite his Budget being overshadowed by gloomy assessments of the UK's future...

Dont forget to “Like” us on Facebook


Need something to share, visit our sister site for the

‘News in the last 30 days”

in a clear concise package ….

 

If you are an artist or interested in art, visit our art website and read about todays artscene and browse some of our artist profiles

 

Comment on this story