The Bank of England is on the cusp of the first strong monetary policy tightening this year!
a look at the economic situation in Britain:
Britain's economy witnessed mixed performance during the last period, especially with regard to the continued rise in inflation recently, which increases pressure on the Bank of England to spice up interest rates again for the fifth month in a row, and it's visiting be at a strong pace this month.
within the past period, British Statistics Office data showed that the annual inflation in Britain recorded a growth of 9.4% at the highest of last June, above the market expectations of recording a growth of 9.3% only. it's also above the previous reading, which recorded a growth of 9.1% at the highest of last May.
additionally ,British economic process data witnessed a strong performance during the past month, because the GDP index recorded a growth of 0.5% during last May, while it had been expected to grow by 0.1% during this era ,and this is often often better than the previous reading, which recorded a contraction By 0.2% in April. Also, the preliminary reading of the manufacturing and services sector in Britain recorded a positive performance during the last month, which had a positive impact on the sterling's trading during the last period.
Statements of decision-makers within the Bank of England and hints about interest:
During the past period, many statements were issued in support of the Bank of England continuing to spice up interest rates and tighten monetary policy strongly during this meeting, most notably, the statements of the Governor of the Bank of England, Andrew Bailey, during which he stressed that targeting the present inflation is one of the biggest challenges that the Committee on The UK's monetary policy has faced it since its formation in 1997, adding that the Bank of England remains committed to bringing inflation back to its 2% target.
additionally , BoE influential person Michael Saunders previously stated that he believes that the cycle of monetary policy tightening and rate hikes by the BoE still has a long way to go, and these comments highlight the likelihood that the Bank will address further rate hikes.
Banks’ expectations of the Bank of England’s rate of interest decisions:
Expectations of major banks, led by Goldman Sachs and TD Securities, indicate that the Bank of England may raise interest rates by 50 basis points, bringing the overnight deposit rate to 1.75%,and thus the decision may be voted on unanimously, and within the event of an opponent of this amount There might be one opponent calling for a smaller increase of only 25 basis points, and this decision will have an impact on the sterling.
Possible scenarios for the Bank of England's decisions:
Expectations indicate that the Bank of England will raise interest rates by about 50 basis points during this meeting, coinciding with the recent inflation data, in an attempt to curb the high inflation that recorded the highest pace in decades. Signs about the long run of monetary policy, and this scenario may have a positive impact on the sterling's movements and is presumably at the instant .
While the second scenario, it's visiting be represented by the Bank of England’s tendency to raise interest rates by about 25 basis points only, coinciding with the bank’s fears that raising interest rates at a strong pace will affect the economic growth of the country, and this scenario are visiting be strongly and negatively reflected in the performance of the sterling against currencies, but this scenario isn't likely at this time.
