Bank of England interest rate expectations (14/12/21)
by Shafiq Shabir
Head of Electronic Trading, Intertrader
If recent remarks made by Michael Saunders – one of two MPC members who voted to raise interest rates last month – are anything to go by, traders won’t be expecting the Bank of England to become the world’s first major central bank to raise interest rates from their historic low this week.
There’s no doubt that inflation is causing a persistent headache for central bankers, but with increased uncertainty around Covid-19, it may well be the case that the Bank has missed its opportunity to act. In reality, it is still early days with the emergence of Omicron, and we won’t know its economic impact for some time, while labour shortages continue to persist.
It’s easy to see the MPC taking a ‘wait and see’ approach until more evidence emerges. Should we see a rate rise, it would no doubt send a seismic shock through jittery financial markets – quite the turnaround from November.
Published: 14 December 2021
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