The British pound has remained surprisingly resilient today after the latest interest rate decision from the bank of England who voted to leave rates on hold at 0.5 percent.
Board members of the BOE voted 7-2 to keep rates unchanged and the following statement regarding inflation gave investors the impression that the central bank would leave rates on hold for the rest of the year with no move now expected until 2019.
According to the BOE, inflation will fall to the bank’s preferred target rate of around 2 percent much faster than earlier predictions so the need to hike rates at this time was not warranted.
They also added that the economy barely grew in the first 3 months of the year, which only added to the case to keep rates the same.
Some analysts believe the BOE were careless in leaving rates on hold for so long as overall, the UK economy has experienced nearly a decade of economic growth since the financial crisis and there was ample chances to hike rates.
The trouble now they say is should the UK economy begin to turn sour because of Brexit negotiations among other things, The BOE will have no room to cut rates from the already record lows which leaves the economy very vulnerable.
"Another poor decision by MPC, keeping interest rates at 0.5pc despite nine years of economic recovery, a buoyant global economy, above target inflation and the lowest unemployment rate for 43 years. A failure of monetary policy strategy and leadership." Said Andrew Sentance, an economist with PwC
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this broker. Before deciding to trade foreign exchange you should consider whether you understand how CFDs work, your investment objectives, your level of experience and readiness of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|