Welcome to Kitco News’ 2022 outlook series. The new year will be filled with uncertainty as the Federal Reserve seeks to pivot and tighten monetary policies. At the same time, the inflationary threat continues to grow, which means that real rates will remain in low to negative territory. Stay tuned for Kitco news learn from the experts on how to navigate the turbulent financial markets in 2022.
(Kitco News) – The Bank of England (BoE) raised its lending rate to 0.25% from 0.10%.
The BoE MPC voted 8 to 1 to raise the bank rate to 0.25%
One of the main comments in the report noted that the committee continues to judge that there are bilateral risks around the medium-term inflation outlook.
He also noted that “Omicron will lower GDP in December and the first quarter of 2022.”
The bank went on to say that staff had revised down their expectations for the level of UK GDP in the fourth quarter of 2021 by around 0.5% and that UK inflation is expected to peak around 6% in April. . Reacting to some of the comments, money markets are expecting almost 15 basis points of BoE rate hikes in February, up to 88 basis points for the whole of 2022.
As you can see on the hourly chart below, the GBP/USD pair rose to trade 0.71% during the session. The price broke through 1.33 and hit a high of 1.3369 on the day.
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