BOE announces its latest monetary policy decision - 4 November 2021
- Prior 0.10%
- Bank rate vote 7-2 (Ramsden and Saunders dissented)
- Gilts purchases £875 billion
- Corporate bond purchases £20 billion
- Total asset program £895 billion (unchanged)
- Gilts purchases vote 6-3 (Ramsden, Saunders, Mann dissented)
- Upward pressure on inflation is expected to dissipate over time
- Some modest tightening of monetary policy over the forecast period was likely to be necessary to meet the 2% inflation target sustainably in the medium-term
- The latest developments, alongside the updated projections, reinforce this view
- Near-term uncertainties remain, especially on the outlook for the labour market, and the extent to which domestic cost and price pressures persist into the medium-term
- BOE concluded that the existing stance of monetary policy remained appropriate
- It will be necessary over coming months to increase bank rate in order to return CPI inflation sustainably to the 2% target
- Full statement summary
The pound is immediately lower on the decision and rightfully so. The BOE has pretty much defied market expectations and as mentioned earlier, rate punters have already more or less priced in a 15 bps rate hike for today so this gets pushed to December.
Cable now hitting fresh lows of 1.3570 on the day, down from around 1.3620 prior to the decision. The 61.8 retracement level of the swing higher in October stands at 1.3573 so let's see if that will hold going into the close today.
A break below that will likely see cable slide further with EUR/GBP now pushing past 0.8500.
