After getting close to the best level to buy Euros in almost a year the Pound has fallen against both the Euro and the US Dollar after Bank of England Governor Mark Carney suggested that although interest rates are likely to be going up it may not happen as soon as some may expect.
Indeed, up until yesterday the chances were very high that we would see an interest rate hike at next month’s meeting on 10th May. Carney went on to say that inflation needs to be monitored very closely as it appears to have fallen quicker than expected and this has caused concern for the central bank.
Growth and inflation are the main two responsibilities of the Bank of England and if inflation is still too high compared to the target of 2% then I think they will be left with little choice but to raise rates but the main question is when?
Carney has said that interest rate rises are likely to be gradual but with the Brexit uncertainty looming in the background this is causing them to consider exactly when they may look to hike rates and by how much.
He went on to say ‘the biggest set of economic decisions over the course of the next few years are going to be taken in the Brexit negotiations’ and this has caused the Pound to fall across the board against all major currencies.
Later today Bank of England MPC member Michael Saunders will be talking in Scotland at 1230pm. Saunders was one of the two members that voted for an interest rate hike at the previous meeting so if he again continues his stance of a rate hike this could help the Pound recover later today.
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