{{0|Pound Sterling}} Rises Against Euro and Dollar After Bank of England Maintains Vigilance
PoundSterlingLIVE – The British Pound rose against the Euro and Dollar after the it was in no mood to entertain thoughts of interest rate cuts.
Bank Rate was maintained at, and the Bank signalled it stands ready to raise interest rates again if needed.
The Monetary Policy Committee (MPC) voted 6-3 to maintain interest rates, with the three dissenters wanting to see rates lifted to 5.5%.
The vote composition tends to provide an initial signal as to which way the MPC is leaning, and economists considered the 6-3 vote split to be a ‘hawkish’ outcome that gives weight to the Bank’s ‘higher for longer’ narrative on the interest rate outlook.
Indeed, the Bank’s statement maintained previous guidance that “monetary policy will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, in line with the Committee’s remit.”
“Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures,” it added.
This contrasts the U.S. Federal Reserve, which effectively condoned market expectations for up to 150 basis points of rate cuts to fall in 2024, a development that weighed on the Dollar.
The exchange rate has lifted back to 1.27 on the divergent guidance coming from the Bank of England and the Federal Reserve: the Bank is clearly keen to keep talk of rate cuts at bay, whereas the Fed is more sanguine.
The exchange rate lifted above 1.16 following the Bank’s decision.
An original version of this article can be viewed at Pound Sterling Live
