020 7898 0500Yesterday, sterling made gains as the BoE interest decision took the markets by surprise. While it was expected that the members of the Monetary Policy Committee would keep interest rates on hold, we did move a step closer to a rate hike, as the vote count shifted from 7-1 to 5-3. This is the closest we have come to raising rates in more than a decade.
The three members voting for a hike were Ian McCafferty, Michael Saunders and Kristin Forbes. It would appear that the central bank is ready to try and combat inflation, which posted a four-year high of 2.9% earlier in the week. It’s by no means a certainty that the rate will increase, especially if the economy continues to weaken.
Economic data has been fairly soft of late with wage growth dropping and the service sector slowing. Also released yesterday were the latest retail sales figures which showed a decline of 1.2%. This will be a concern as consumer spending makes up a large part of the nation’s Gross Domestic Product figures.
