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Place your bets for the Brexit rate hike

Monday, October 30, 2017 - 01:45

The Bank of England is expected to hike borrowing costs in the coming week for the first time in more than 10 years. But as Silvia Antonioli reports, critics think the timing is bad.

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Tightening is in the air. The Bank of England is expected to hike borrowing costs this week for the first time in more than 10 years This would be after 4 interest rate hikes in the US in 2 years and as the European Central Bank cuts back on bond buying, although gently. BOE governor Mike Carney needs to address a pressured pound and high employment driving up inflation. So the consensus is for an rate rise from 0-point-25 percent to 0-point-5 percent. SOUNDBITE (English) Charles Stanley, Chief Investment Commentator, Garry White "The way we need to see this as a reversal of the interest rate cut after the vote to leave the European Union this isn't the start of a tightening cycle...It's about levelling the playing field" A Reuters poll though shows that more than 70 percent of economists believe now is not the time to raise rates -- though slightly more than that said it would happen anyway. They worry about uncertainty related to Brexit, hitting consumer spending and businesses. And quarterly growth at 0-point-4 percent is still well below pre-Brexit vote levels and lags both the US and the euro zone. Some think Carney is about to "pull a Trichet" mirroring then-ECB president Jean-Claude Trichet's move to raise rates in 2008 just as the global financial crisis was about to hit. SOUNDBITE (English) Charles Stanley, Chief Investment Commentator, Garry White "There is an argument they don't really need to do it. I mean when rarely the Bank of England increases its interest rates when quarterly GDP was below not-point- 5 percent." The BoE is not the only central bank discussing policy. The Bank of Japan is due announce its policy decisions on Tuesday.

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Place your bets for the Brexit rate hike

Monday, October 30, 2017 - 01:45