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BoE holds rates, signals caution with hawkish vote
The Bank of England voted 8-1 to maintain its interest rate at 5% signaling a cautious, Sterling surged to its highest level against the dollar since March 2022 following the decision
BoE holds interest rates at 5% with an 8-1 vote
Swati Dhingra was the only member pushing for a 25bps rate cut
US initial jobless claims fell to 219,000, below the expected 232,000
BoE holds rates steady at 5%, signals hawkish stance with 8-1 vote
The Bank of England (BoE) maintained its Bank Rate at 5.00% following an 8-1 vote, as widely anticipated by markets. Swati Dhingra, known for her dovish stance, was the sole member advocating for a 25 basis points rate cut. Notably, Deputy Governor Dave Ramsden, who had backed rate cuts since May, opted not to vote for a reduction this time.
In its policy statement, the BoE highlighted that UK economic data had provided "limited news" compared to expectations set out in the August Monetary Policy Report (MPR). Inflation remained at 2.2% in August, with forecasts suggesting it could rise to 2.5% by the end of the year, driven by base effects from last year's drop in energy prices. However, services inflation remained elevated at 5.6%, and private sector wage growth slowed to 4.9% in the three months to July.
The BoE reiterated that, in the absence of significant new developments, it would continue to adopt a "gradual approach" in unwinding its restrictive policies. Monetary policy is expected to remain tight for an extended period until inflationary risks are adequately contained, allowing inflation to return to the bank’s 2% target. The central bank underscored its commitment to monitoring inflation closely and determining the appropriate level of restriction at each meeting.
In response to the decision, the British pound surged, reaching its highest level against the US dollar since March 2022.
US jobless claims drop to 219k, below forecasts
In the United States, initial jobless claims fell by 12,000 to 219,000 in the week ending September 14, coming in below market expectations of 232,000. The four-week moving average of claims also dropped by 3,500, settling at 227,500.
