30 January 2023 - Zahawi sacked over tax scandal

Andrew Bailey, the Governor of the Bank of England, believes that flexibility is the most important feature of monetary policy going forward. The Monetary Policy Committee is due to announce the latest change in short term interest rates on Thursday following its meeting this week. While observers expect there to be a further hike of fifty basis points, they also expect the end to the current cycle of hikes to end quite soon, possibly by the end of the currency quarter. Bailey is on record as saying that he doesn’t expect rates to begin to fall until the fourth quarter, but he has commented recently that he believes that the Bank needs to be more flexible on policy and look at ways in which the level of demand can be altered in the short term. Having begun a programme of interest rates rises over a year ago when they were at historic lows, they have taken an inordinate amount of time to reach a level where they are beginning to restrict activity. In the Governor's opinion, this is far too long a time while inflation was rising exponentially. One answer would have been to increase the increments of the increase, but there was concern that given the precarious state of the economy at the time, that it could easily have led to a deeply damaging recession. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.