#ForexChief #BOE #GBPUSD #BankofEngland #MonetaryPolicyCommittee #Omicron⠀
🏛️ BOE raised interest rates: unexpected but logical⠀
📈 For a long time, analysts have not been so wrong. BOE Monetary Policy Committee was expected to keep the bank rate at 0.1% due to a new surge in coronavirus cases. Alas, the monetary regulator decided that it was time to abandon fear of a pandemic and raised the key interest rate by 15 basis points at once − to 0.25%.
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BOE became the first of the world's central banks to risk raising the cost of borrowing; reason was the abnormally high rate of inflation. The consumer price index rose by 5.1% in November, and if nothing is done, then in April next year inflation could have been more than 6%, which is three times higher than the target level.
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I had to act decisively.⠀
Bank of England cut its growth forecasts for December and the first quarter of 2022 due to the proliferation of Omicron. The committee voted to raise the bank rate with a score of 8-1, with only Sylvanas Tenreiro opposing. BOE kept its £ 875billion ($1.16 trillion) government bond purchase program and also bought out another £ 20 billion in corporate bonds.
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GBP/USD rate has grown sharply, but the main speculative volumes have already been closed. The yield on two-year bonds, particularly interest rate sensitive ones, rose more than 7 basis points on the day (0.56%). The yield on 10-year bonds rose 6 points (0.80%).
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Now the markets may well count on next stage of rate correction (up to 0.5%) in February, but confidence in such forecasts has significantly decreased. We will analyze the situation on our own and do not risk it in vain.
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Profits to y’all!