Please see below article received from EPIC Investment Partners this morning, which coversthe Bank of England’s stance on keeping the base rate at 5.25%.
As expected, the Bank of England followed the Fed, voting 6-3 in favour of keeping the base rate at 5.25%, with a warning that monetary policy will likely need to stay tight for an “extended period of time”. Andrew Bailey, the Governor of the central bank, warned that whilst progress had been made in the fight against inflation, it was still too high and there was “absolutely no room for complacency”.
“We will keep interest rates high enough for long enough to make sure we get inflation all the way back to the 2% target. We will be watching closely to see if further increases in interest rates are needed, but even if they are not needed, it is much too early to be thinking about rate cuts,” Bailey said, adding that the committee would rely on future data to balance the risks “between doing too little and doing too much”.
In its latest Monetary Policy Report released with the decision, the committee acknowledged that inflation has fallen below the earlier projections made in August. The bank’s revised outlook now sees the consumer price index (CPI) at around 4.75% in Q4 of 2023, followed by a fall to about 4.5% in Q1 of the next year and a further drop down to 3.75% in Q2.
As for the UK’s GDP, it is now expected to have stagnated in Q3 2023, which is a weaker performance compared to the MPC’s August forecasts. The GDP is now projected to exhibit only 0.1% growth in the fourth quarter, also falling short of the previous expectations from August.
This was the first MPC that former US Federal Reserve Chair Ben Bernanke attended, as part of his review into the Old Lady’s forecasts and communications. The BoE appointed Bernanke in July to examine the forecast process after heavy criticism from politicians and some economists for underestimating the threat inflation posed. His review is focused on the lessons to be learned for future forecasts “during times of significant uncertainty.” It will not pass judgment on past policy decisions.
Today sees the penultimate Nonfarm Payrolls numbers for 2023. The market is going for +180k lower than October’s bumper +336k with an unemployment rate of 3.8%, hourly earnings of 0.3% and a participation rate of 62.8%.
Lastly, how the mighty have fallen. “Crypto King” Sam Bankman-Fried had gone from being (a supposedly) multi-billionaire to a broke, convicted fraudster who faces decades behind bars. The 31-year-old former CEO of FTX was found guilty by a jury on all seven charges of fraud and conspiracy against him. The sentencing for these charges, which carry up to 115 years in prison, is scheduled for March 2024.
A jury took just over four hours yesterday, including dinner, to conclude that Bankman-Fried stole USD 8 billion in customer funds from his crypto exchange FTX to fund risky investments, political contributions, and luxury real estate.
Please check in again with us shortly for further relevant content and news.
Chloe
03/11/2023