Reaction to Bank of England decision (16/06/22)
by Shafiq Shabir
Head of Electronic Trading, Intertrader
Make no mistake, this is an incremental change to monetary policy, rather than the monumental moves we saw from the Fed. Despite a contracting economy, the level of punishment inflation has been dishing out to the UK consumer meant a fifth consecutive rate rise was all but confirmed ahead of the Bank of England’s MPC meeting.
The news that policymakers have decided to act once more will come as little surprise to many this time round, although the news pales in comparison to the tightening monetary policy in the US.
The cost-of-living crisis continues to make front-page news, and quite rightly, given the relentless doom and gloom of inflated consumer prices, supply chain bottlenecks and rocketing energy prices. By raising rates – albeit steadily – Threadneedle Street is again showing that it is more concerned about higher living costs than it is about putting the brakes on an economy which is already showing signs of possible recession.
But despite hazardous growth warnings, radical action remains vital to cool soaring inflation. The question is whether we will need to see greater fiscal intervention to boost growth, while the Bank takes action to curb inflation.
Published: 16 June 2022
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