Home Financial News Financial institution of England ends run of 14 straight rate of interest hikes after cooler-than-expected inflation

Financial institution of England ends run of 14 straight rate of interest hikes after cooler-than-expected inflation

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Financial institution of England ends run of 14 straight rate of interest hikes after cooler-than-expected inflation

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A passageway close to the Financial institution of England (BOE) within the Metropolis of London, U.Okay., on Thursday, March 18, 2021.

Hollie Adams | Bloomberg | Getty Photos

LONDON — The Financial institution of England on Thursday ended a run of 14 straight rate of interest hikes after new information confirmed inflation is now operating beneath expectations.

The Financial institution had been mountain climbing charges constantly since December 2021 in a bid to rein in inflation, taking its predominant coverage charge from 0.1% to a 15-year excessive of 5.25% in August. It has held this charge unchanged in September.

Traders on Wednesday ramped up bets that the Financial institution would pause its rate of interest mountain climbing cycle after U.Okay. inflation got here in considerably beneath expectations for August.

The annual rise within the headline shopper worth index dipped to six.7% from the 6.8% of July, defying a consensus forecast that it could rise to 7%, as easing meals and lodging costs offset a hike in costs on the pump. Notably, core CPI — which excludes risky meals, power, alcohol and tobacco costs — dropped to six.2% from July’s 6.9%.

Early Thursday morning, cash markets had been break up roughly 50-50 on whether or not the Financial institution would pause or go for one other 25 foundation level hike, based on LSEG information, earlier than swinging again to 60-40 in favor of a hike within the hour earlier than the choice.

The Financial institution of England has been treading a slim path between bringing inflation again to Earth and tipping the thus far surprisingly sturdy financial system into recession. U.Okay. GDP shrank by 0.5% in July, whereas quite a lot of British corporations issued revenue warnings on Tuesday.

The U.S. Federal Reserve on Wednesday held rates of interest regular however indicated that it nonetheless expects another hike earlier than the top of the 12 months, together with fewer cuts in 2024 than beforehand anticipated.

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