UK Inflation Could Force BoE To Earlier Hike

The Bank of England (BoE) might have lacked the fireworks of the European Central Bank last week when it left its monetary policy unchanged but, with the U.K.’s economic data steadily improving, analysts are now questioning whether the central bank could hike interest rates sooner than it had forecast back in July.

Then the bank said that it would not consider raising interest rates from their current 0.5 percent until the jobless rate falls to 7 percent, which the bank had not expected to happen before the end of 2016.

A barrage of improving economic data recently, however, could see the bank revise its inflation, growth and unemployment forecasts on Wednesday when it publishes its latest quarterly inflation report. As such, any revision could signal it will increase interest rates earlier than mid-2016.

Indeed, while last week the European Central Bank surprised investors by cutting interest rates further in the face of stalling economic growth in the euro zone and deflation concerns, the BoE is looking at economic recovery – and the opportunity to tighten monetary policy sooner.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza