Mark Carney

Bank of England Monetary Policy Committee set to leave rates and QE unchanged.
Rhetoric from the central bank is set to take a hawkish tilt and warn on rate rises.
Thursday will be a test of the Bank of England’s credibility, with markets sceptical that the MPC has room to increase interest rates.

LONDON — The Bank of England faces a test of its credibility, and market reaction its monetary policy announcement on Thursday will indicate just how seriously investors take take the central bank.

Policy is almost guaranteed to remain unchanged, with interest rates at a record-low 0.25% and the bank’s bond-buying programme capped at a maximum of £435 billion overall.

What is expected to change, however, is the tone taken by the central bank, as it tries to prepare the markets, and the wider British public, for the possibility of interest rate hikes in the near future as the key policy trade-off the bank has to address shifts direction.

At its simplest level, the policy dilemma facing Britain’s central bank is that it must balance surging inflation brought on by the weakened pound since the referendum, with the slowdown in the economy, dwindling consumer spending and declining inward investment.

So far, the weak …read more

Source:: Businessinsider – Finance

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