The BoE hikes as expected but there was a vote split surprise
(Kitco News) - The Bank of England has raised interest rates by 25bps as expected.
BoE hikes by 25bps, the vote split 8-1 with Cunliffe voting in favor of a hold. This decision seems slightly dovish considering the last meeting was 4-3 with dissenters favoring 50bps. Minutes should show an appetite for continued hikes in more depth though. Could the Russian invasion of Ukraine be weighing on the minds of the MPC?
The vote split was 9 for a hike and 1 to hold (Cunliffe)
Main notes from the statement:
BOE inflation around 8% in Q2, may climb higher.
Cunliffe placed greater weight on the impact on household incomes.
The BoE said underlying nominal earnings growth is likely to be higher than pre-pandemic levels. With the trend expected to continue.
BoE says further modest tightening "might be appropriate" in the coming months. Before Feb meeting it was "likely to be appropriate".
In an initial market reaction, GBP/USD dropped heavily as it seems the market had not priced in some of the hesitations of the future path of the BoE's interest rates. The key wave low is close to 1.30 level but there is a key congestion level between 1.340-60 that could be very sticky.