The Bank of England is widely anticipated to lower interest rates on Thursday, facing a confluence of challenges including sluggish domestic growth, upcoming tax increases on businesses, and U.S. President Donald Trump's trade tariffs. Traders will scrutinize the Monetary Policy Committee's vote and revised growth and inflation projections for clues on the Bank's future policy direction.
The Bank of England is widely expected to cut interest rates on Thursday, to a complex backdrop of a tepid domestic growth outlook, incoming fiscal reforms and U.S. President Donald Trump's market-rattling tariff threats.
Traders will want to see how the central bank views any potential inflationary impact from the fiscal reforms announced by the U.K. government in October, which include a significant hike in the tax businesses face on payrolls. "If Chinese goods find their way to the continent and into the U.K., and exert a downward pressure on prices, it gives the and the BOE more scope to lower interest rates more aggressively than markets are anticipating this year, especially as growth is expected to weaken over the coming quarters," Dan Boardman-Weston, chief executive officer and chief investment officer of BRI Wealth Management, told CNBC's"Street Signs" on Tuesday.
Anthony Karaminas, global head of sub-advised fixed income at SEI, said that the U.K.'s situation of"stagflation-lite" — economic stagnation combined with above-target inflation — was a challenge for the BOE as it"seeks to support economic activity while also adhering to its explicit inflation mandate."
INTEREST RATES BANK OF ENGLAND MONETARY POLICY UK ECONOMY INFLATION
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