March 21, 2018

AvaTrade, Expectation of Bank of England's Interest Rate Decision on Thursday?

Are You Ready for the BoE Interest Rate Decision?


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This article is originally referred from AvaTrade News.

The Brexit aftermath hinges on one event: The Bank of England’s Interest Rate Decision on Thursday, March 22nd, 2018 at 12:00 GMT.

Last month, the Bank of England’s rate-setting Monetary Policy Committee (MPC) voted unanimously to leave rates at 0.5%.

However, the cost of borrowing cannot remain this low for much longer.

Market experts are divided in 2 groups

  • Bullish factors for the GBP
    1. The British economy is strong
    2. Exports are benefiting from the pound’s plunge
    3. The British economy is ready for higher interest rates
  • Bearish factors for the GBP
    1. Inflation is above target
    2. Brexit is expected to weigh on the British economy
    3. Brexit uncertainty makes it difficult for the BoE to act

What do you think? Will the GBPUSD rise or fall?

The British Interest Rate Dilenma

Britain is experiencing significant price pressure that is forcing wages up, and above- 2% target inflation.

These factors could force the BoE’s hand to raise interest rates, presumably as soon as May.

However, the future is hard to predict, with Brexit remaining a ‘material risk’ to the financial system, according to the Bank of England.

This has led the British Central Bank to adopt a ‘wait and see’ policy. But how long can it wait for clear voices to emerge from the Brexit negotiations?

Original Source: AvaTrade News

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