Why Hawks Are Circling Again at the Bank of England

The Bank of England’s interest rate decision may be about to get interesting again, after years of predictability.

With fears Greece could crash out of the euro zone on the back burner for now, interest rate rises are becoming the next big bet for traders.

The central bank’s Monetary Policy Committee (MPC), which makes interest rate decisions and has kept its base rate at 0.5 percent for more than six years, may start showing signs of a more pro-rises stance at next Thursday’s meeting.

Many economists are now expecting a 7-2 split in the committee, rather than the unanimous 9-0 in favor of maintaining rates at 0.5 percent last time around.

Martin Weale and Ian McCafferty, widely seen as the committee’s two most hawkish members, are viewed as the two most likely to want to raise rates. There are a couple of other members who are outside bets to take the leap.

David Miles, for whom the August meeting will be his last on the MPC, might also surprise with a vote to raise rates, according to Samuel Tombs, senior U.K. economist at Capital Economics. He thinks the bank will probably keep rates on hold until the second quarter of 2016.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.