DWS: Commentaar in aanloop naar BoE-vergadering

DWS: Commentaar in aanloop naar BoE-vergadering

May 9, 2023

Central bank UK
Britse vlag.jpg

Katrin Löhken, UK Economist at DWS, comments on the next BoE meeting.

In the UK, both the inflation figures and the wage increases have recently been much stronger than hoped for - the issue of fighting inflation is therefore not yet over. This suggests that the Bank of England (BoE) will vote for another interest rate step of 25 basis points at its meeting on Thursday.

This would mean that it would have raised the key interest rate, the Bank Rate, at a record pace to 4.50 percent. And this, although it had actually already implicitly indicated an end to rate increases. It still expects its previous rate hikes to significantly slow the economy.

At present, however, it is obviously still too early for that. The British economy has held up better than expected and has probably even made it through the winter without a recession, despite the unprecedented decline in real incomes. Interest rate hikes are only reaching the broad economy with a significant delay. This means that the BoE will continue to act in a very data-dependent manner. Wages and underlying inflation dynamics will remain in focus.

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