BoE raises Bank Rate by 25bps to 1.00% as widely expected. The decision was made by 6-3 vote, with three members voted for 50bps hike, including Jonathan Haskel, Catherine Mann and Michael Saunders.
In the accompany statement, BoE reaffirmed its preference that the Bank Rate will be used as the active policy tool in adjusting monetary policy stance. It will “consider” beginning the process of selling the assets purchased., but the decision will depend on economic circumstances. The strategy on offloading the assets will be provided at the August meeting.
BoE also updated the economic projections conditions on a market-implied path for Bank Rate that rises to around 2.50% by mid-2023, before falling to 2.00% at the end of the forecast period. CPI is expected to rise further over the remainder of the year, averaging slightly over 10% at its peak in 2022 Q4, then falls back to 2% target in around two years. GDP is projected to fall in 2022 Q4 and calendar year GDP growth is broadly flat in 2023.
