Global X : BoE raised their policy rates 75 bps at their November meeting. This was in line with expectations but was their largest interest rate increase since 1989.
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Michelle Cluver, CFA – Portfolio Strategist (VP) Global X ETFs
This comes on the back of UK inflation coming in higher than expected at 10.1% in September, with food and utility costs being key areas of inflation concern.
This sharp increase in policy rates came alongside recessionary warnings from the BoE. The BoE currently expects recessionary conditions during 2023 and into the first half of 2024.
While Powel indicated that U.S. policy yields are likely to be higher than markets were expecting, the BoE indicated that peak rates may be lower than the 4.5% currently priced into financial markets.
This shifted the economic growth and policy rate differentials between the UK and U.S., contributing to U.S. dollar strength.
Source : ETFWorld.co.uk
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