Bank of England hints that interest rates could rise in November – business live

UK central bank predicts that some stimulus will probably be withdrawn “in the coming months”Breaking: BoE leaves interest rates unchanged……but hints that rate hike is comingCity: 42% chance of rate rise in NovemberNovember hike is ‘real possibility’ – City IndexPound hits new one-year high 2.58pm BST By sounding so hawkish today, the Bank of England has managed to strengthen the pound without actually having to raise interest rates.Talking a currency up, or down – depending if you want to get inflation higher or lower – is a key central bank tactic these days.“Many will understandably now think that a rate rise in imminent, but in fact our view is that it is more likely to be next summer. This is because the MPC is still dominated by doves, such as Mark Carney, who are concerned about the impact higher rates could have on real wages so dependent on consumer spending.“Of course, the risks could change, particularly if sterling were to devalue further, but for now the Bank’s rhetoric appears to have done its job.” 2.50pm BST The price of short-dated UK government debt has fallen since the Bank of England’s announcement, pushing up the interest rate (or yield) on the debt.That’s another sign that the City is expecting the Bank of England to withdraw some stimulus, perhaps in November.The sell-off on Thursday was particularly pronounced among shorter dated gilts, more sensitive to forthcoming changes in interest rates, where two year yields hit a new high for this year and rocketed ever closer to pre-referendum levels.“In our view, although the die is not quite cast on raising rates just yet, any policy decisions which move government bond yields back towards more normal levels are a welcome return towards bond markets which look more connected to economic fundamentals.” Continue reading…
Via: Bank of England hints that interest rates could rise in November – business live