UK Asset Purchase Facility

Our Monetary Policy Committee (MPC) decides what monetary policy action to take. The MPC sets and announces policy eight times a year (roughly once every six weeks). In this video, the MPC discusses the decisions taken in February 2022 and answers questions from the press.

For all the recent talk of the Fed and ‘quantitative tightening’, it’s the Bank of England that’s poised to lead the charge on reducing the size of its balance sheet. Starting this week, policymakers are set to end a policy of reinvesting proceeds from government bonds maturing within its portfolio. We look at what this means for markets. What is the market impact of ending bond reinvestments? The Bank of England is poised to hike rates to 0.5% this week. And this means that the Bank's own threshold for reducing the size of its ...

For a second month in a row, the BoE MPC surprised financial markets with its policy decision in December. Having failed to deliver the widely anticipated tightening in November when an updated Monetary Policy Report (MPR) was hot off the press, the central bank unexpectedly voted 8-1 to raise Bank Rate at its year-end meeting despite the absence of new economic forecasts and only limited fresh data. Both outcomes have left investors somewhat cautious about this week’s decision. However, with inflation still climbing, economic growth ...

We expect the Bank of England to hike for the second time since the pandemic on Thursday, the first back-to-back rate hike since 2004. We expect the BoE to raise the Bank Rate to 0.50% from 0.25%. BoE Governor Andrew Bailey sounded concerned when he spoke a week ago emphasising that the tight labour market may imply upward pressure on wages and commodity prices remain high. It is important to keep in mind that the BoE, unlike e.g. the ECB, did not struggle with too low inflation ahead of the pandemic. Inflation expectations are also ...

Economists expect the Bank of England to hike interest rates consecutively for the first time since 2004 as the central bank looks to steer the U.K. economy through persistent high inflation. The Bank fired the starting gun on rate rises in December, hiking its main interest rate to 0.25% from its historic low of 0.1%. Since then, data has shown U.K. inflation soared to a 30-year high in December as higher energy costs, resurgent demand and supply chain issues continued to drive up consumer prices. The December rate hike came despite ...

With Chinese and several neighbouring markets on holiday for the annual Spring Festival that is looking to be a touch brighter than last year’s (chart 1) the main focus will be upon the extent to which the Federal Reserve’s more hawkish pivot created spillover effects of consequence to other central banks in Europe, Australia and Brazil. Our pre-existing forecast for 7 Fed hikes this year is getting some assistance. Omicron’s sharp shock effects will also be evaluated when Friday’s US and Canadian jobs land and face material but ...

Given the steep losses many investors have experienced in recent weeks, many want to identify the culprit that is responsible. Two have emerged. Federal Reserve Chair Powell and Russian President Putin. Putin's threat may have encouraged some risk adjustment, but looking back at February 2014, when Russia invaded Crimea and annexed it, it should not be exaggerated. If anything, the S&P 500, for example may have gained a little, depending on the exact dates one uses. The same is for the Swiss franc against the euro. The franc rose to ...