+

Cookies on the Business Insider India website

Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.

Close
HomeQuizzoneWhatsappShare Flash Reads
 

Here comes the Bank of England ...

Apr 14, 2016, 15:49 IST

Reuters/Luke MacGregor

It's Bank of England day.

Advertisement

This is the day when the bank releases both the minutes of its Monetary Policy Committee, and its latest interest rate decision.

The bank will publish its decisions at midday UK time (7:00 a.m. ET) against a background of slightly better than expected UK inflation, but also a stark warning on the UK economy from the IMF.

The BoE will more than likely hold rates at 0.5% for the 85th consecutive month. Last month, the MPC voted unanimously, 9-0, to hold rates.

While the interest rate decision is crucial, markets will be more interested in analyzing the tone of the bank's minutes, particularly on inflation, where people will be looking for clues on when a rate rise, or even cut, might happen.

Advertisement

This month, there are conflicting opinions on whether the MPC will become more hawkish, or more dovish in its tone. Pantheon Macroeconomics argues that: "At today's MPC meeting, the centre of gravity of the policy debate is likely to shift towards the merits of raising interest rates, rather than cutting them."

That's because in March, consumer price inflation in the UK grew from 0.3% to 0.5%, above the MPC's February forecast of 0.4% growth. Pantheon says that this growth is "challenging the consensus view in the markets that the MPC will leave interest rates on hold until the end of the decade."

However, on Thursday morning, Sky News economics editor Ed Conway suggested that some MPC members could actually be leaning towards a cut in rates. "I understand at least two members of the MPC are strongly considering a vote for a cut in interest rates" Conway tweeted.

In the past, governor Mark Carney has hinted that 2016 could be the year in which the BoE raises rates for the first time since the financial crisis. But that looks pretty much impossible right now, and the vast majority of analysts now expect the BoE's next hike to come towards the end of the decade. Some are even arguing that a cut will come before a hike.

For the moment, the BoE is indicating that three big factors - a persistently low oil price, a slowdown in emerging market economies, and weak wage growth - are holding inflation back, and keeping rates low.

Advertisement

NOW WATCH: Broadway's biggest hit 'Hamilton' is making over $2 million a month - here's why the producer thinks it could be making a lot more

Please enable Javascript to watch this video
You are subscribed to notifications!
Looks like you've blocked notifications!
Next Article