The Bank of England (BOE) raised its main Bank Rate by 25 basis points for the third time in a row to fight high inflation, which policymakers now forecast to peak at 8% in the second quarter.
The Monetary Policy Committee (MPC) of the Bank of England voted 8-1 to keep interest rates unchanged, with Deputy Governor Jon Cunliffe voting to keep rates stable because he anticipates dramatically increased commodity prices to have a significant impact on consumer demand. The vote to boost interest rates last month had a narrower majority of 5-4. Along with the policy decision, the BOE raised its inflation forecast, now predicting a second-quarter peak of 8%, up from 7.25% at the previous meeting.
The policy statement, on the other hand, was dovish, implying that consensus expectations for the central bank to raise its Bank Rate to 2% by the end of the year had gotten ahead of itself. “Some more mild tightening may be justified in the coming months,” the MPC wrote, “although there were risks on both sides of that judgment depending on how medium-term prospects evolved.” The British pound fell by around 1% against the US dollar and the euro as a result.
However, The crypto markets appear unaffected, with bitcoin (BTC) remaining mildly volatile on both sides of the $41,000 barrier.
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