abrdn: Downside risks to sterling increased
abrdn: Downside risks to sterling increased
Below, Luke Bartholomew, Economist at abrdn, comments on the Bank of England's interest rate decision.
The Bank of England hiked rates today, but signalled it is very uncomfortable with how high markets are currently expecting rates to rise.
Some aspects of the Bank’s forecasts are rather less informative than usual, given the uncertainty over fiscal policy in general, and energy policy in particular. However, the overall message is clear. The Bank thinks that if it were to deliver a rate hiking cycle in line with current expectations of investors, this would lead to a prolonged and deep downturn.
So, the Bank’s hope is that by hiking more today and in the near future, it will ultimately need to deliver less hikes. This is a tricky message to communicate, and it remains to be seen how open markets are to it given the recent period of volatility and the Bank’s track-record of underestimating how much tightening it ultimately delivers.
But with the Fed signalling last night that it will push rates even higher than it had expected, the downside risks for sterling have increased.
Deel dit bericht
Gerelateerde berichten
-
Lees meer over "Carmignac: Peak pessimism and peak optimism in december central bank meetings"Carmignac: Peak pessimism and peak optimism in december central bank meetings
-
Lees meer over "DNB: Economists agree on the role of central banks in the green transition"DNB: Economists agree on the role of central banks in the green transition
-
Lees meer over "abrdn: BoE interest rate outlook cloudier from now on"abrdn: BoE interest rate outlook cloudier from now on
-
Lees meer over "Saxo Bank: Bank of England zal na renteverlaging voorzichtige toon aanslaan"Saxo Bank: Bank of England zal na renteverlaging voorzichtige toon aanslaan
-
Lees meer over "MFS: Geen BoJ-rentestap komende week, volgende verhoging in december"MFS: Geen BoJ-rentestap komende week, volgende verhoging in december
-
Lees meer over "AXA IM: Fed might be doing too much and ECB too little"AXA IM: Fed might be doing too much and ECB too little
-
Lees meer over "AXA IM: Central banks at a crossroads: Pre-emptive cuts or patient waiting?"AXA IM: Central banks at a crossroads: Pre-emptive cuts or patient waiting?
-
Lees meer over "AXA IM: Bank of England will most likely cut rates in November"AXA IM: Bank of England will most likely cut rates in November
-
Lees meer over "Invesco: De Fed zou een voorbeeld kunnen nemen aan de BOC"Invesco: De Fed zou een voorbeeld kunnen nemen aan de BOC
-
Lees meer over "PIMCO: BoE decision will be like a coin toss"PIMCO: BoE decision will be like a coin toss