7 March 2023 - Rate expectations unclear

Bank of England Governor Andrew Bailey remains unconvincing in his commitment to bring inflation under control, as he appears more concerned to avoid being accused of tipping the country into a recession that may be difficult to escape. Despite the Central bank having hiked rates at every Monetary Policy Committee meeting since December 2021, Bailey has been lukewarm in his determination, appearing to place more emphasis on avoiding the economy contracting. With inflation beginning to fall as energy prices, at least, continue to fall, and some stability is being seen at lower levels, Bailey won’t continue to sanction higher short-term rates for a moment longer than is necessary. He is able to call on the support of his colleague from the Bank at MPC meetings, but the three independent members have very different views on what needs to be done. Catherine Mann has voted for larger rate increases at the last three meetings, while Silvana Tenreyro believes that economic growth should be more protected by taking a breather and pausing rate hikes. 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.