Bank of England cuts rates again, sterling higher
Adds fresh comments
LONDON, Nov 7 (Reuters) -The Bank of England cut interest rates on Thursday for only the second time since 2020 and said future reductions were likely to be gradual, seeing higher inflation and growth after the new government's first budget.
Its Monetary Policy Committee (MPC)voted 8-1 to cut rates to 4.75% from 5%, a stronger majority than expectations in a Reuters poll for a 7-2 vote in favour of a cut.
Sterling rose after the decision to $1.2932 from $1.2906 GBP=D3 before the decision and was last trading at 83.22 pence per euro versus 83.36 pence earlier EURGBP=D3.
Britain's gilt yields dipped, with rate-sensitive two-year yields at 4.47% GB2YT=RR versus 4.48% just before the decision.
London's blue-chip FTSE stock index was just 0.12% lower on the day .FTSE, while the domestically-focused FTSE 250 index was 0.6% higher .FTMC.
COMMENTS:
MICHAEL METCALFE, HEAD OF MACRO STRATEGY, STATE STREET, LONDON:
"I think there’s going to be a lot of focus on the forecasts, probably more than normal, to see the impact of the budget. I don’t think it’s that different to the Office for Budget Responsibility’s (OBR) assessment of a short-term boost to growth and a modest boost to inflation.
"The interesting thing to tease out in the press conference is that the (bond yield) curve has shifted up a lot since the budget, which isn’t incorporated into the forecast."
"If you take a much higher assumption for rates which is where we are now, does that now mean that the market is still too pessimistic for rate cut expectations?
"If you take the monetary policy report at face value it looks quite hawkish. But then it becomes quite reflexive quite quickly in the sense that markets have already priced in some of that hawkishness. And that we have the new risk of a weaker international backdrop if tariffs come in."
ZARA NOKES, GLOBAL MARKET ANALYST, JP MORGAN ASSET MANAGEMENT, LONDON:
"The Bank of England (BoE) made the correct decision to deliver what markets were expecting and cut interest rates today. However, the pace of cuts from here has been muddied by recent political developments. The UK economy is now contending with a number of cross-currents which make the growth and inflation outlook highly uncertain.
"Last week’s UK budget revealed plans for front-loaded fiscal stimulus which – at a time when the supply side of the economy is constrained – risks stoking inflation next year. The return of President (Donald) Trump to the White House adds another layer of complexity. While there is still a high degree of uncertainty as to what the next Republican administration will enact when in office, tough protectionist measures could be a headwind for global growth and the UK may be vulnerable given the openness of its economy. For these reasons the Bank should be very wary of giving concrete forward guidance on the pace of further cuts. In our view, with the underlying dynamics of the domestic economy pointing to inflation lingering for some time, the Bank should resist cutting too quickly."
SIMEON WILLIS, CHIEF INVESTMENT OFFICER XPS GROUP, UK:
"Given the boost to public spending and upwards pressure on inflation resulting from Rachel Reeves’ Autumn budget, the markets had factored in a less rapid easing of the Bank rate.
"This MPC announcement is in keeping with that revised expectation, although as is often the case, it is the longer-term rate of easing that is of greatest interest. Movements of 0.25% in themselves are relatively inconsequential. The path of expected rate reductions likely remains cautious particularly given the OBR's inflation outlook for 2025 being above target."
RUPERT WATSON, GLOBAL HEAD OF MACRO AND DYNAMIC ASSET ALLOCATION, MERCER, PORTSMOUTH, UK:
"We expect rate cuts are likely to continue however the central bank will want to take account of the fiscal position following the budget and may adjust their pace accordingly.
"The BoE will also want to consider the impact of the election of a new U.S. President for the domestic economy. The overall picture in the UK is one of slow growth with a slight boost in 2025, but with inflation coming down to the 2% target the BoE has maintained its gradual easing stance."
SHAMIL GOHIL, PORTFOLIO MANAGER, FIDELITY INTERNATIONAL, LONDON:
"Going forward, the Monetary Policy Committee has a tough job balancing the future impact of the UK budget and government’s fiscal policy. Cost increases for companies from higher taxes, national insurance and national minimum wage will likely be at least partially passed on to consumers via price hikes next year. Fiscal stimulus should also have a positive impact on growth allaying any recessionary fears. Therefore, the sensible path continues to be for a gradual and cautious easing process as these affects are slowly realised over time.
"Looking ahead, the implications of the U.S. election and potential for higher global tariffs may offset some of this growth and may also feed into higher inflation as the second order impact of these tariffs take hold across Europe and China, potentially muddying the waters."
Reporting by the Reuters Markets Team; Compiled by Dhara Ranasinghe
අදාළ වත්කම්
නවතම පුවත්
වියාචනය: XM Group සමාගම් ක්රියාත්මක කිරීම පමණක් වන සේවා සපයන අතර වෙබ් අඩවියේ හෝ වෙබ් අඩවිය හරහා ලබා ගත හැකි අන්තර්ගතය බැලීමට සහ/හෝ භාවිත කිරීමට පුද්ගලයෙකුට ඉඩ සලසමින් අපගේ මාර්ගගත වෙළඳ පහසුකම වෙත ප්රවේශය ලබා දෙන අතර වෙනස් කිරීමට හෝ පුළුල් කිරීමට අදහස් නොකරයි. එවැනි ප්රවේශය සහ භාවිතය සෑම විටම (i) නියමයන් සහ කොන්දේසි, (ii) අවදානම් අනතුරු ඇඟවීම් සහ (iii) සම්පූර්ණ වියාචනයට යටත් වේ. එබැවින් එවැනි අන්තර්ගතයක් සාමාන්ය තොරතුරුවලට වඩා වැඩි යමක් සපයා නොමැත. විශේෂයෙන්ම, අපගේ මාර්ගගත වෙළඳ පහසුකමේ අන්තර්ගතය පෙළඹවීමක් හෝ මූල්ය වෙළඳපොළවල කිසිදු ගනුදෙනුවක් සිදු කිරීමට ඉදිරිපත් කිරීමක් නොවන බව කරුණාවෙන් සලකන්න. ඕනෑම මූල්ය වෙළඳපොළක වෙළඳාම් කිරීම ඔබේ ප්රාග්ධනයට සැලකිය යුතු අවදානමක් එක් කරයි.
අපගේ මාර්ගගත වෙළඳ පහසුකමේ ප්රකාශිත සියලු කරුණු අධ්යාපනික/තොරතුරුමය අරමුණු සඳහා පමණක් අදහස් කෙරෙන අතර මූල්ය, ආයෝජන බදු හෝ වෙළඳ උපදෙස් සහ නිර්දේශයන්; හෝ අපගේ වෙළඳ මිල පිළිබඳ වාර්තාවක්; හෝ ඕනෑම මූල්ය උපකරණයක ඉදිරිපත් කිරීමක් හෝ ඒ සඳහා පෙළඹවීමක්; හෝ විශේෂ ඉල්ලීමකින් තොරව ඔබ වෙත ලබා දෙන ලද මූල්ය ප්රවර්ධනයන් ලෙස නොසැලකිය යුතුය.
ඕනෑම තෙවන පාර්ශවීය අන්තර්ගතයක් මෙන්ම XM විසින් සකසන ලද අන්තර්ගතය එනම් අදහස්, පුවත්, පර්යේෂණ, විශ්ලේෂණ, මිල ගණන් සහ වෙනත් තොරතුරු හෝ මෙම වෙබ් අඩවියේ අන්තර්ගත තෙවන පාර්ශවීය වෙබ් අඩවි සඳහා සබැඳි සාමාන්ය වෙළඳපොළ විවරණයක් ලෙස "පවතින පරිදි" සපයා ඇති අතර එහි ආයෝජන උපදෙස් ඇතුළත් නොවේ. ඕනෑම අන්තර්ගතයක් ආයෝජන පර්යේෂණයක් ලෙස අර්ථ දක්වා ඇති ප්රමාණයට, ආයෝජන පර්යේෂණයේ ස්වාධීනත්වය ප්රවර්ධනය කිරීමට නිර්මාණය කර ඇති නෛතික අවශ්යතාවලට අනුකූලව අන්තර්ගතය සකසා නොමැති බවත් එලෙස අරමුණු කර නොමැති බවත් ඔබ සලකා පිළිගත යුතු අතර එබැවින් එය අදාළ නීති සහ රෙගුලාසි යටතේ අලෙවිකරණ සන්නිවේදනයක් ලෙස සලකනු ලැබේ. ඉහත සඳහන් තොරතුරු සලකා මෙතනින් ප්රවේශ විය හැකි, ස්වාධීන නොවන ආයෝජන පර්යේෂණ සහ අවදානම් අනතුරු ඇඟවීම පිළිබඳ අපගේ දැනුම්දීම ඔබ කියවා තේරුම් ගෙන ඇති බව සහතික කර ගන්න.
