Bank of England Raises Interest Rates Back to Pre-Pandemic Level of 0.75%
Jamie Crawley - Coindesk
The Bank of England (BOE) lifted its main Bank Rate by 25 basis points for the third consecutive meeting as it battles surging inflation, which policymakers now expect to peak in the second quarter at 8%.
- The vote by the U.K. central bank's Monetary Policy Committee (MPC) was 8-1, with Deputy Governor Jon Cunliffe voting to hold rates steady as he expects sharply higher commodity prices to put a big dent in consumer demand. Last month, the vote to raise rates had a slimmer majority at 5-4.
- Alongside the policy decision, the BOE also lifted its inflation expectations, now seeing a second quarter peak of 8% versus 7.25% anticipated at the last meeting.
- The policy statement, however, leaned dovish, suggesting consensus expectations for the central bank to bring its Bank Rate to 2% by year-end might have gotten ahead themselves. "Some further modest tightening might be appropriate in the coming months, but there were risks on both sides of that judgement depending on how medium-term prospects evolved," said the MPC. That quickly sent the British pound lower by about 1% vs. the U.S. dollar and the euro.
- Crypto markets don't appear to be affected, with bitcoin (BTC) continuing to modestly move about on both sides of the $41,000 level.
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