Boe To Keep Rates On Hold

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Boe To Keep Rates On Hold

BoE To Keep Rates On Hold Until End Of 2027

According to Pantheon Macroeconomics, the GBP will remain well supported by the BoE's decisions. Pantheon Macroeconomics is an economic research firm, and they think the BoE will hold rates until the end of 2027.

Pantheon Macroeconomics added that the long-term policy of the Bank of England will remain restrictive. If we look at the US side, they are also resisting the urge to lower rates and have kept policy unchanged.

UK Economic Data Is Mostly Mixed

They also commented on how the data coming out of the UK is mostly mixed. The data shows soft readings of inflation and wage growth. At the same time, economic activity shows signs of resilience.

All of this means the Bank of England will not be under any pressure to cut rates. A direct result of this will be a strong GBP. In fact, strong and resilient growth means the BoE might even keep the tightening alive for longer.

As for inflation, Pantheon Macroeconomics thinks it has yet to peak. Also, they made it clear that it is still unclear if energy prices will produce any 2nd round effects. Meanwhile, they added that the labor market is not as loose as the BoE thinks.

Pantheon Macroeconomics said that unemployment in the UK has fallen. At the same time, payroll employment shows signs of stabilization.

All of this hints at a supportive policy for the GBP. We will also see the implications of this BoE policy in the GBP/USD and GBP/EUR pairs.

It appears that the bank's decision to hold the rates is due to inflation fears. After all, any attempt to lower the policy rate could lead to higher inflation.

The jump in energy prices has also played a vital role in the high inflation reading. So, if the central bank doesn't take precautions, the high energy prices could send the inflation reading higher.

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