Bank of England set to defy Fed’s rate-hike lead, despite rising inflation
The Bank of England is expected to keep rates steady Thursday, even after U.K. inflation rose to 3.1% and energy costs keep pressure on prices.
TL;DR
- The Bank of England is predicted to leave interest rates unchanged on Thursday.
- This decision comes as U.K. inflation rose to 3.1% in August, exceeding the 2% target.
- The rise in inflation is primarily attributed to a 23% year-on-year increase in motor fuel costs.
- The U.K. is vulnerable to external energy shocks, contributing to a cost-of-living crisis.
- Markets anticipate a rate hike of at least 25 basis points at the Bank of England's November meeting.
- This stance diverges from the U.S. Federal Reserve and the European Central Bank, which have recently raised rates.
- Global inflation, political instability, and fiscal policy concerns have increased borrowing costs for the British government.
- Reports suggest the Bank of England may also announce plans to cease selling long-dated gilts.