Bank of England may follow example of Fed
2023.03.08 04:43
Bank of England may follow example of Fed
By Ray Johnson
Budrigannews.com – After the Federal Reserve of the United States indicated that it might increase interest rates, investors in Britain fully priced in a 0.25 percentage point increase in interest rates at the Bank of England’s March meeting on Wednesday.
Based on calculations by Refinitiv, the overnight index swap market had shown a 90% chance that the BoE would raise rates on March 23 to 4.25 percent from 4% and a small chance of a pause.
Instead, investors now anticipate a chance of approximately 5% of a larger 0.50 percentage point increase on March 23.
Following Fed Chair Jerome Powell’s overnight comment that the United States may need to raise interest rates more than anticipated in response to recent strong data, the re-pricing follows. After Powell’s remarks, the dollar rose against the pound.
At the beginning of the month, the benchmark two-year gilt yield on the interest rate-sensitive 0.625% 2025 British government bond reached its highest level since Oct. 21.
