Traders Eyes Bank of England’s Decision on Rate Hike

Bank of England expected annoucne its decision on rates hike on Thursday as the policymakers faces tough decision given ressurgence of COVID-19 and higher than expected inflation


The Bank of England on Thursday will give direction on its first rates hikes as the central banks faces headwinds from resurgence of COVID-19 wave and after inflation numbers came out highest in over 10 years.

Earlier traders were betting against an increase in rates with reassurance of COVID-19 until on Wednesday inflation number advanced more than expected reaching 5.1% in November. ‘

“The Monetary Policy Committee has a difficult decision to make,” Ellie Henderson, an economist at bank Investec said, as reported by Reuters.

He further added “There is now the real risk of inflation becoming entrenched – especially considering the signs of second-round effects in terms of rising wages, supported by a strong labour market – but this is balanced against the threat to the economic recovery from the new Omicron variant.”

In the case of BoE raised interest rate it would ahead of U.S. Federal Reserve. The U.S. on Wednesday said it will accelerate its bond buying program and will only hike rates after wrapping up of tapering.

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