Bank of England vote to hold interest rates, despite MPC split

Britain's Prime Minister Theresa May leaves after a meeting with the Leader of Northern Ireland's Democratic Unionist Party Arlene Foster at 10 Downing Street after the general election in London Tuesday

The Bank of England has edged closer to raising interest rates as a deeper split emerged among its committee of policymakers, with three out of eight voting for an immediate rise to keep inflation in check.

Ian McCafferty, Michael Saunders and Kristin Forbes all voted to hike the interest rate by 25 basis points to 0.50%. The rise in political uncertainty since the General Election - and questions over the type of Brexit PM May will look to pursue - has cast a pretty big shadow over the Bank's "smooth" European Union withdrawal assumption made at last month's MPC meeting.

The Committee voted unanimously to maintain government bond purchases at £435bn and corporate bond purchases at £10bn.

Prices surged to 2.9 percent last month - nearly a full percentage point higher than the central bank's target.

Russ Mould, investment director at AJ Bell, said the MPC seems to be responding to the increase in United Kingdom inflation to four and five-year highs, as measured by the consumer price and retail price indices, even if some of the key causes of that spike - a higher oil price and a weaker pound - are now unwinding. They noted inflation was now expected to overshoot the Bank's target by more than previously expected.

British inflation at 4-year peak
The inflation rate in Britain has risen to its highest level in four years, hitting 2.9 percent in May from 2.7 percent in April. We had confirmation on Wednesday that for the first three months of the year wages have been falling in real terms.

The minutes said inflation could rise above 3% by the autumn and is expected to remain above the 2% target for an extended period as the fall in sterling continues to feed through into the prices of consumer goods and services. Officials noted that domestic inflationary pressures in the British economy appeared to be intensifying.

It continued: "A slowdown in household consumption and gross domestic product as a whole had recently begun. although consumer confidence had held up, there had been further signs of a slowing housing market and new vehicle registrations had fallen sharply".

The US Dollar briefly plunged on Wednesday as investors reacted to news that US consumer prices had slowed much further than expected in May.

On specific stocks, DFS furniture warned full-year earnings would be below market expectations due to a weakened trading environment, hurting its shares and those of Next, Kingfisher, Marks & Spencer, Tesco.

"Different members of the committee placed different weights on these arguments". For this reason, the MPC's remit specifies that, in such exceptional circumstances, the Committee must balance any trade-off between the speed at which it intends to return inflation sustainably to the target and the support that monetary policy provides to jobs and activity. Those moves came after the Bank of England voted 5-3 to hold its key interest rate at 0.25%. Hence, other things equal there is no need of the further policy tightening.

FDNY: High carbon monoxide levels in basement fire
It has been confirmed that the fire was caused by a broken flue pipe that leaked exhaust fumes into the basement of a restaurant. The meters measure up to 1,000 parts per million, enough to "render you unconscious very, very quickly", Leonard said.

"With the United Kingdom economy stuttering, economic and political uncertainty magnified by the election result and earnings growth very weak, a compelling case can still be made for the Bank of England to hold off from any interest rate hike - not just now but for some time to come".

Britain had the slowest economic growth in the G7 in the first three months of 2017.

"We recently brought forward our forecast for the first BOE hike from 2019Q2 to 2018Q4, but our conviction about the precise timing is low given complications around Brexit negotiations, which have only increased following the election".

What Mortgage has teamed up with London & Country to offer you expert advice on the right mortgage deal.

La Decima - The Story: Rafael Nadal reflects on first-round win
The Open era, when the Grand Slam tournaments allowed professional players to compete with amateurs, began in 1968. Will additional Roland Garros titles matter from this point on? And Roger's lost once, he's spread out his year.

Share

Related News

  • Rep. Roger Williams: A Lot of Heroes Today Among My Friends

    Rep. Roger Williams: A Lot of Heroes Today Among My Friends

    In another tweet, he wrote: "We ask that you please respect the privacy of him and his family during this hard time". Shots rang out during a baseball practice Wednesday for Republican congressmen in Alexandria , Virginia .

    'Wonder Woman' buries 'The Mummy' at box office

    Following up its record-breaking opening weekend last week, " Wonder Woman " repeated its box office victory worldwide. Tom Cruise , star of " The Mummy ", is pictured above at a special screening of the film in New York City.
    Sessions' plans to testify surprised Senate intelligence panel members

    Sessions' plans to testify surprised Senate intelligence panel members

    Bharara, who was sacked by the president hours after he refused to return a call from him. Trump himself attributed his dismissal of Comey to the Russian Federation investigation.
  • Paul: It could have 'been a killing field'

    Scalise is the first sitting member of Congress to be shot since Giffords, who was wounded in a January 2011 attack . But Davis said, "I don't think it's a coincidence that no bullets were fired outside the baseball field".
    Pentagon gets authority to set USA  'troop levels' in Afghanistan

    Pentagon gets authority to set USA 'troop levels' in Afghanistan

    Earlier this year, the Pentagon was considering a request for roughly 3,000 more troops, mainly for training and advising. Mattis has warned Congress the US -backed Afghan forces were not beating the Taliban despite more than 15 years of war.
    More Alleged iPhone 7s, iPhone 8 Front & Back Panels Leaked

    More Alleged iPhone 7s, iPhone 8 Front & Back Panels Leaked

    A Foxconn insider claimed earlier this month that the iPhone 7S and 7S Plus would stick to the unibody aluminum design. The iPhone 7S and 7S Plus are expected to have the same design as the iPhone 7 and 7 Plus, except for the glass back.
  • Champions Chelsea face Burnley opener

    Champions Chelsea face Burnley opener

    It'll be the first time West Ham have played at home on the final day since they played Reading in 2013. Antonio Conte's men will play Spurs at Wembley as part of a testing start to their defence of the title.

    Blame gasoline for oil's drop to the lowest level of the year

    He said at OPEC's meeting in late May that there would be a "marked" decrease in the kingdom's shipments to the U.S. US crude futures, meanwhile, were down 3.4 percent to $44.92 a barrel, the lowest intraday level since May 5.

    Trump outlines privatizing air traffic control

    He also called the system "ancient, broken, antiquated" and "horrible" and said his reforms would make it safer and more reliable. He would also transfer responsibility for a $36 billion air traffic modernization program at the FAA to a new private entity.
  • Czechs to take legal action against EU weapon directive

    An EU official said that despite its legal challenge, Slovakia had heeded the call to take in refugees and so escaped sanction . Sobotka said in a statement on Tuesday: "The Czech Republic doesn't agree with the relocation system based on migrant quotas".
    OH  grocer reaches a deal for local Marsh locations

    OH grocer reaches a deal for local Marsh locations

    CVS was fighting to enforce a provision in that deal barring those stores from reopening pharmacies for five years. Fresh Encounters bid $8 million on four locations in OH and 11 others around central Indiana.

    Sessions' testimony to Congress Tuesday to be open to public

    Trump's personal lawyer also challenged Comey's account, saying the president never asked for the investigation to be dropped. Comey also has said Sessions did not respond when he complained he didn't "want to get time alone with the president again".