Pound jumps as BoE hints at rate rise in May

GettyThe Bank of England has kept interest rates unchanged

The Pound was boosted during late morning and noon trading Friday after the Monetary Policy Committee member Gertjan Vlieghe told an audience at a Confederation of British Industry (CBI) event the current robust state of the United Kingdom labour market probably warrants a sustained tightening cycle from the Bank of England (BoE).

The Old Lady of Threadneedle Street raised rates for the first time in 10 years last November, and is set to do so once or twice in 2018.

The bank had hiked the rates to 0.5% last November, the first increase in a decade.

The central bank, however, made clear it is ready to raise interest rates at its next meeting in May.

"As ever the Bank is at pains to point out that the pace of interest rate rises will be gradual".

Sterling hit a one-month high against the US dollar and the BoE-sensitive, two-year gilt yield touched its highest since 2011 after the data on Wednesday.

The Bank of England's Monetary Policy Committee as a whole voted 7-2 to keep rates at 0.5% but said "ongoing tightening" was likely to be needed to return inflation of 2.7% back to target.

The world economy is growing at its fastest since the financial crisis, helping Britain at a time when it is suffering from uncertainty about Brexit. While the BoE sat tight this time around, minutes of the meeting that ended on Wednesday firmed up market expectations that it will raise its key rate by a quarter-point at its next gathering in May. Even the European Central Bank - which is still struggling with anemic price growth - has its eye on phasing out its massive bond purchases.

GettyGovernor of the Bank of England Mark Carney
GettyGovernor of the Bank of England Mark Carney

However, Britain's growth outlook remains muted.

Though annual inflation in February fell to an annual rate of 2.7 percent, wage growth is picking up and that should support spending and inflation.

The Bank of England kept rates steady today but two of its policymakers unexpectedly voted for an immediate rate rise, in a statement that will boost investors' confidence that borrowing costs will rise in May.

Average wage growth has also moved closer to inflation meaning consumers are not seeing wages decrease whilst the costs of goods increase.

Minutes of the latest MPC meeting revealed Ian McCafferty and Michael Saunders voted to raise rates to 0.75% amid concerns over inflation as wage growth has started to pick up.

However those slipping inflation figures were more or less brushed aside by chief economic adviser to the EY ITEM Club Howard Archer.

"Given the fact that economic data has not been altogether positive in the past month, this will likely underline the Committee's resolve to begin the slow process of normalising monetary policy in the face of still stubbornly high inflation, but very tepid growth", Metcalfe said.

The only major South African data to watch out for next week will come at the end of weekly trading, when the trade balance for February is announced.

Related News:

  • Duchess of Cambridge is officially on maternity leave

    Duchess of Cambridge is officially on maternity leave

    The charity also provides athletes with media training, nutritional advice and performance lifestyle guidance. "It is therefore vital that we nurture children through this crucial, early period", she said.

    "Stranger Things" Cast Negotiate Enormous Pay Raise for Season 3

    Stranger Things is expected to go into production on an eight-episode season three next month in April. Netflix did not comment on the stars' salary negotiations, Deadline reported .
    KCR After Meeting Mamata: Third Front Will be For People

    KCR After Meeting Mamata: Third Front Will be For People

    Mamata Banerjee , however, said consultations with many other parties too would begin on the formation of a Federal Front. On the issue of leadership of the front, Rao said there would be a collective leadership.
  • Syrian Army takes town in Eastern Ghouta

    Syrian Army takes town in Eastern Ghouta

    State media said Saturday that more than 105,000 civilians had fled Ghouta in recent weeks. Talks are ongoing for the third pocket around Ghouta's largest town of Douma .
    Apple Is Producing Its Own MicroLED Screens In Secret

    Apple Is Producing Its Own MicroLED Screens In Secret

    Apple's interested in creating MicroLED screens which are expected to result in brighter panels which consume less power. Apple's push to make its own display technology in-house is in no way guaranteed, according to Bloomberg's Mark Gurman.
    Further doubt cast over Luke Shaw's Manchester United future

    Further doubt cast over Luke Shaw's Manchester United future

    To say Jose Mourinho wasn't happy with the performance, however, would be putting things mildly. Matic was an island of personality and quality. "When you play bad you must have personality".
  • 2nd storm-related death on Long Island

    2nd storm-related death on Long Island

    Most major roadways in the state were clear, but residents were being urged to drive cautiously and allow extra travel time. Out of thousands who lost power, just 165 customers were without electricity, PSEG Long Island reported about 8 p.m.
    Venezuela Lashes Out at Trump's Petro Ban

    Venezuela Lashes Out at Trump's Petro Ban

    Undermining U.S. sanctions is reportedly what piqued Russia's interest in the project. This, Russian officials believe, gives excessive influence around the globe.
    Mall Stores Are Dying - Why Claire's Says Its Bankruptcy Will Be Different

    Mall Stores Are Dying - Why Claire's Says Its Bankruptcy Will Be Different

    It's just the latest retailer to seek bankruptcy protection, close stores or go out of business entirely. The company says that it plans to emerge from Chapter 11 in September with $150 million of liquidity.
  • Summit offers hope to son of American held in North Korea

    Summit offers hope to son of American held in North Korea

    Washington and Pyongyang have no diplomatic relations and no US president has ever sat down with a North Korean leader. Delegations from the North and South are set to meet again next week to prepare for a meeting between Kim and Moon.
    Minneapolis Police Officer Charged In Justine Damond's Death

    Minneapolis Police Officer Charged In Justine Damond's Death

    Harrity claims both he and Noor got spooked when Damond approached their squad auto in the alley that night. The Somali-American did not have a body camera turned on nor was his squad vehicle camera recording.
    Russia: Don't rule out mafia-style hit, urges Corbyn

    Russia: Don't rule out mafia-style hit, urges Corbyn

    Jeremy Corbyn has fiercely defied his critics, reiterating the need for evidence in the Sergei Skripal poisoning case. The Labour leader warned the lack of British diplomacy could lead to a "McCarthyite intolerance of dissent".

Most liked

Facebook Aims to Rebuild Trust After Cambridge Analytica Data Breach
Several lawmakers have called on Zuckerberg to testify before Congress , and he opened the door to that possibility on Wednesday. Facebook asked Cambridge Analytica to agree to an audit to show that the data was deleted , as the data firm promised in 2015 .

New England Patriots Fly Parkland Students to Rally
The Patriots debuted two brand-new team planes, both Boeing 767s, during the 2017 National Football League season. The students and families boarded the aircraft Thursday at Fort Lauderdale-Hollywood International Airport.

Apple's iPhone X2 Could Get a Price Cut
Apple is designing and producing its own MicroLED screens for its devices as part of a test project, sources told Bloomberg . My guess is that a $100 premium for the iPhone X Plus over the iPhone X is the most likely pricing scenario.

Broad ready to do damage in New Zealand series
Here's everything you need to know as England complete the winter with against New Zealand in a two-match Test series. He also played only one game in the Plunket Shield this season.

Israel says 2007 Syria strike message to enemies
The material speaks of an ultra-secretive operation , with very few knowing details of the strike and a cover story provided. It had always been widely assumed that Israel carried out the strike, though it never formally acknowledged doing so.

Maryland high school on lockdown following shooting
It's the latest school shooting in a country still reeling from last month's attack in Parkland, Florida that killed 17. A 16-year-old girl who authorities said had some type of relationship with the shooter was critically injured.

Hyundai Cautious About Autonomous Cars After Uber Accident, Exec Says
The latest incident with Uber raises question on whether autonomous cars are ready to be rolled out on public roads. Back in September 2017, a fatal crash was reported involving a Tesla in autopilot mode and a truck.

Kashmir: Geelani resigns as the chairman of Tehreek-e-Hurriyat
Sehraie, who was until now the general secretary of Tehreek-e-Hurriyat, was tipped to be the first choice to replace Geelani. Observers say that Geelani's departure from active politics would have far-reaching impact on the politics of Kashmir.

DUI patrols for St. Patrick's Day planned in Manhattan Beach
The app also offers enhanced features, allowing users to search all participating bars and restaurants through out California. Use the OTS DDVIP app which is free to download, to ensure users can easily order an Uber, Lyft, or Curb.

Minister claims Stephen Hawking considered Vedas superior to Einstein's theory
The mass-energy equation was Einstein's solution to reconciling the laws of electro-magnetic radiation with the laws of motion. At the Science Congress in 2015, there were claims that the Vedic texts spoke of sophisticated airplanes .

Turkey's Erdogan says Afrin city centre under 'total' control
On March 8, Turkish forces and allied Syrian rebels take control of the key northern town of Jandairis from the Kurdish militia. Presidential spokesperson İbrahim Kalin has dubbed the clearing of the YPG from Afrin's town center as "significant".

UMBC etches name in sports lore, routs top seed Virginia
The two teams played even through the first half. - It finally happened - a No. 16 seed ousting a No. 1 in March Madness . Over on the women's side, that Mississippi State last-second win over UConn in last spring's Final Four is way up there.

Iranian official warns Europeans against imposing sanctions to 'please' Trump
The two sides would talk about the removal of sanctions on Iran as well as the examples of violations of the deal by Washington. "The constant ultimatums by U.S.

UN launches $1bln Rohingya refugee appeal
The UN stressed, however, that efforts must remain focused on securing the safe return to Myanmar of those displaced. The UN has appealed for $951 million to meet the needs of almost 900,000 Rohingya refugees in Bangladesh.

North Korean minister's surprise Sweden visit fuels speculation over Trump talks
Ri's delegation included Choe Kang Il, deputy director general of the foreign ministry's North America section. No date or location for the talks has been announced, although they are expected to occur in late May.