by Chris Becker
Last night saw the Bank of England (BOE) raise its benchmark interest rates to 0.75%, the highest since the bowels of the GFC in 2009. This puts it in august territory with the Federal Reserve, which revealed at the latest FOMC meeting that a September rate rise is also in order, plus the Canadians:
But the resulting fall in Pound Sterling – still under enormous threat as Brexit concerns weigh on the currency – was based on the BOE’s slow stance to catch up with other central bank hawks.
More from The Independent:
All nine members of the BoE’s Monetary Policy Committee (MPC) voted to raise the base rate by a quarter of a per cent.
Economists had been predicting a split vote thanks to mixed signals for the strength of the UK economy.
But the MPC said the economy had recovered from a seasonal slowdown exacerbated by the Beast from the East.
“The MPC continues to judge that the UK economy currently has a very limited degree of slack,” the committee said in minutes published with its decision.
“Unemployment is low and is projected to fall a little further. In the MPC’s central projection, therefore, a small margin of excess demand emerges by late 2019 and builds thereafter, feeding through into higher growth in domestic costs than has been seen over recent years.”
Sterling has been under pressure since hitting a 1.40 high against USD in February following the failing Brexit negotiations with Europe. Before the latest meeting price was indicating a bullish reversal with the classic falling wedge pattern presaging a breakout, but it hasn’t come to pass:
