Daily Archives: February 9, 2011
Around 24 hours away from the much awaited Bank of England interest rate decision and investors are managing to keep the markets reasonably calm ahead of the release.
With inflation being not managing to pull itself under 3% since January of 2010 there is an outside chance that we could see a rate hike in the U.K tomorrow, the last report I had read analysts had mentioned an 18 % chance of this happening.
Personally, I would be surprised to see a hike tomorrow however you can never rule these things out and should this happen we would more than likely see major Sterling strength. A hike may be slightly priced in so on the other side of matters should we see rates held the Pound may well slip ever so slightly, however all eyes will be on any comments following this which may well also cause volatility.
The U.K would in fact be the first of the Western, debt ridden countries to raise rate and a rate hike is generally seen as positive for the currency concerned so one would imagine this will be great for anyone looking to send money overseas however terrible for those looking to bring money back.
According to Bank of England’s Mervyn King, high unemployment, slow wage growth and the upcoming spending cuts should curb inflation naturally in the long term, and with this cocktail of factors I find it hard to see the hike tomorrow, however a hold fire and see what happens over the coming weeks and months approach this time around.
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