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What are the markets waiting for from the Bank of England

2017-09-14 09:45 am | No Views : 274

The Bank of England's interest rate on the pound is due today, and analysts' views on the possibility of a rate hike by the Bank of England are divided, especially after inflation reached 2.9%, well above the central bank's target.



Inflation rates are higher than the target of the central bank
Consumer prices rose mainly, excluding energy and food prices by 2.7% in August, due to the depreciation of the pound during the second quarter of the year. The pound has fallen by 10% since the Kingdom's exit referendum The United States of the European Union, or the so-called bricast.

And so high inflation, led to pressure on consumer spending, which recorded a performance of four years ago, lost wage growth rates in July at 2.1%, and if we calculate wage growth rates to include inflation rates, we find that in the negative region .


Britain's access to full employment rates
This raises questions. Although Britain has reached full employment rates, in addition to the unemployment rate reaching its lowest level in 42 years, at 4.3% in July, we do not see a rise in wage growth rates.

This is due to the devaluation of the pound, caused by the blurry vision on the BRIC, and the divisions within the British parliament over EU exit negotiations. There is no clear plan yet on how to exit and whether it will be a gradual exit or a difficult exit.

The head of the Bank of England, Carney, said in a previous interview that he can not prevent a decline in real income, which is meant by a decline in wage growth rates, including inflation, because that decline is due to the fluctuation of the BRICT negotiations.


Growth rates in the UK
Looking at growth rates in the United Kingdom, it is fairly stable, recording a rise of 0.3% in the second quarter of this year, but less than the two growth rates compared to the same period last year, which was 0.5%, lower than the growth rate in the quarter Last year, which recorded 0.7%

The decline in growth rates is due to the decline in the service sector in the United Kingdom, driven by rising inflation. It is worth noting that the service sector represents 75% of the British economy, while the British manufacturing sector benefited from the devaluation of the pound, For low production cost.


What are the markets waiting for from the Bank of England?
Markets are awaiting today's decision by the Bank of England, with expectations that the central bank will keep rates at 0.25%, and keep the asset purchase program unchanged at 435 billion pounds.
The focus remains on the members of the Central Monetary Policy Committee, lost, and I saw a share in the last meeting, as 2 members never agreed to raise interest rates. Will we see changes in the number of members agreeing to raise interest rates?


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