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Bank of England with the biggest raise in 27 years
Bank of England yesterday raised the interest rate by 50 basis points, which was the biggest one-off hike since 1995. The move was in line with market consensus.
The Monetary Policy Committee voted with a majority of 8: 1 in favor of raising rates by 50 basis points. However, the market expected members to vote unanimously. Hence the result may have turned out to be a disappointment.
The pound lost, but only for a while
In the summary of the meeting, the Committee stated that inflation may continue to rise above 13%. in the last quarter of this year. Inflation fall to the target of 2 percent. is expected by 2024. According to the Committee, the recession in Great Britain will start in the last quarter of this year as the outlook for GDP dynamics worsens.
As a result of the weakening of the growth outlook and one vote against the interest rate hike, the pound may have reacted with a decline in the first moment, losing ca. 0,5 percent against the dollar. GBP / USD exchange rate fell below 1,2100. This morning, however, it returned to the region of 1,2150.
Today, data on the situation in the US labor market
Today the market seems to live by reading the data from the US labor market, i.e. NFP. The consensus assumes that 250 new jobs were added to the US economy in July. new jobs, and the unemployment rate remained at 3,6%. Other reports, however, may point to a worsening of the situation, as US companies announced plans to cut 25810 jobs in July 2022, an increase of 36,3%. compared to July 2021, it is the second largest number of layoffs this year. The Challenger report, however, indicates that larger-scale job losses have yet to start despite signs of slowing employment growth following an extended period of growth.
The US labor market, together with inflation, comes under a double mandate Federal Reserve. The US central bank may tighten monetary policy, but only until there are no signs of deterioration in the labor market. Hence, employment data may now come to the fore. NFP publication today at 14:30 PM.
