UK’s Recovery May Trigger Earlier BOE Rate 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.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu