PREVIOUS TRADING DAY EVENTS 03 August 2023 

Yesterday, the Bank of Englands Monetary Policy Committee MPC voted by a majority of 63 to increase the Bank Rate by 0.25 percentage points, to 5.25. It is noteworthy that two members preferred to increase Bank Rate by 0.5 percentage points, to 5.5, and one member preferred to maintain Bank Rate at 5.

The U.S. Federal Reserve and the European Central Bank increased rates by 25 basis points last week, but unlike the Bank of England BoE, markets think they are at or near the end of their ratetightening cycle.

The BoE warned that borrowing costs were likely to stay high for some time as it continues to battle high inflation.

The MPC will ensure that Bank Rate is sufficiently restrictive for sufficiently long to return inflation to the 2 target, the BoE said in fresh guidance.

Governor Andrew Bailey I dont think it is time to declare its all over, he told a press conference, adding it was far too soon to speculate about the timing of any rate cuts. Bailey also said, We might need to raise interest rates again but thats not certain.

The Bank of England today acknowledged for the first time in the current tightening cycle that its monetary policy is tight, as Kallum Pickering, senior economist at Berenberg said. Although policymakers kept open the prospect of further hikes this supports our call that the BoE is close to peak rates.

If we stick to the plan, the Bank forecasts inflation will be below 3 in a years time…