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
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
