Pound Holds Steady Amid BoE Rate Decision
The Bank of England maintained interest rates and slowed its government bond sales, as the UK faces high inflation, slow growth, and volatile debt markets. The upcoming Autumn Budget will be crucial for Britain's financial stability amidst challenges in inflation and the labor market.
The British pound and other UK assets remained stable on Thursday following the Bank of England's choice to leave interest rates unchanged, while reducing the pace of its government bond sell-off. The decision comes as policymakers navigate the complexities of persistent inflation, sluggish growth, and a volatile debt market.
Despite current inflation nearly double the central bank's 2% target and signs of weakening labor markets, money markets anticipate another rate cut by March next year. Christopher Mahon, a multi-asset manager at Columbia Threadneedle, suggests potential positive developments could allow for more easing in interest rates than currently expected.
As the UK is labeled the most stagflationary developed economy, all eyes turn to the upcoming Autumn Budget on November 26. Finance Minister Rachel Reeves faces the challenge of adhering to borrowing rules to maintain financial stability, amid fluctuating long-term bond yields and the BoE's strategic adjustment in gilt sales.
Google News