Bank of England’s Super Thursday approaches

UK interest rates have been held at 0.5 per cent again by the Bank of England’s Monetary Policy Committee (MPC).

However, a rise appears to be on the cards, with Governor Mark Carney indicating last month that the first increase could happen around the turn of the year.

“No one really expected a rate increase, although we did expect more than one member of the MPC to challenge six years-plus of record low rates”, he said.

“Were Bank rate to follow the gently rising path implied by market yields, the Committee judges that demand growth would be sufficient to return inflation to the target within two years”, the minutes said.

The Bank stressed how a recent strengthening of the pound and a renewed fall in oil prices would push down inflation until at least the middle of next year and said the impact of the rise in sterling could persist even longer.

“Having moved in a decidedly hawkish direction over the past few months, the MPC surprised by delivering a relatively dovish Inflation Report and minutes on “super Thursday”.

In its inflation report, published today, the BoE says the outlook for the rest of the year remains “uncertain”, and is likely to be “sensitive” to developments in Greece, although near term concerns have fallen. Despite higher revisions to growth, the central bank states they are anticipating the pace to slow into 2016 and fall to 2.6% from this year’s 2.8% pace.

“There is not that much inflationary pressure at the moment, [although] we expect that to build over time but as I saw it… there isn’t any urgency to raise interest rates right now”.

GBP to Euro, USD, CAD Conversion Rates Lower on Dovish BoEThe Pound weakened significantly against the majors on Thursday, as an overload of information from the Bank of England was released. Investors should note that wage growth is expected to continue to rise while there is little change in the GDP forecast over the next two years.

Today the spotlight was on the Bank of England, which released three pieces of data in the form of an interest rate decision, minutes from their meeting, and inflation projections.

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Early signs of an economic slowdown have emerged, with figures showing that activity in the UK’s powerhouse services sector eased last month.