The Bank of England is anticipated to raise interest rates this Thursday for the 15th consecutive time, potentially pushing the rate to 5.5%. This move, expected by the market, has projected a 70% likelihood of a 25-basis-point hike. However, indications from the Monetary Policy Committee (MPC) suggest that this could be the final increase in the current series.
Governor Andrew Bailey and Chief Economist Huw Pill have hinted that interest rates may be nearing their peak, metaphorically referred to as “Table Mountain.” Despite these indications, there’s no certainty that the MPC will halt its tightening policy. The decision will hinge on whether the committee assesses that sufficient monetary tightening has already occurred.
The committee members’ views on the future course of policy are varied. Catherine Mann, known as the most hawkish member of the MPC, advocates for further tightening. On the other hand, Swati Dhingra, recognized for her dovish stance, argues that the current policy is already adequately restrictive.
Market sentiment widely anticipates a “one and done” scenario with this potential rate hike. Yet, given the diverse perspectives within the MPC, this remains uncertain. The final decision will rest on whether enough monetary tightening has been accomplished in the committee’s view.
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