PRCBroker:MPC Comment: Currently adopting an attitude of continuing to raise interest rates.
2023-06-29
■ BOE has decided to raise interest rates by 0.50%, which is higher than market expectations, indicating the possibility of additional interest rate hikes.
■ The increase of Consumer price index (CPI) is predicted by BOE that the salary growth will also accelerate, and whether there is a large space for interest rate increase in the future.
On the 22nd, the Bank of England (BOE) Monetary Policy Committee (MPC) raised the policy interest rate from 4.50% to 5.00%. The decision to raise interest rates was approved by a 7-2 majority, with 13 consecutive occasions since December 2021. The 50bps interest rate hike is the largest since February, and the policy interest rate has reached its highest level since September 2008. President Bailey of BOE pointed out that "the economy is better than expected, but it is still necessary to deal with it because the inflation rate is too high." The statement pointed out that "recent data shows that the inflation process is an important fluctuation factor that lasts for a longer time", and "the secondary effect of domestic prices and wages caused by external cost shocks, eliminating the time required calculation is significant. For the policy path, the traditional guidance is maintained as' further tightening of monetary policy is necessary if sustained inflationary pressure is further demonstrated '.
The rise rate of Consumer price index (CPI) in May, announced by the British Bureau of Statistics on the 21st, was 8.7% year-on-year, unchanged from the previous month. On the other hand, the core CPI excluding energy, food, alcohol, and tobacco increased by 7.1% year-on-year, and the service price CPI also accelerated to 7.4% year-on-year, both of which raised the BOE forecast (in May) to the highest level since 1992. According to human resources consulting firms, the wage increase for British corporate labor in March May (base salary, median) has been at a level of 6.0% since the start of the survey in 1991 and has remained high for five consecutive quarters. In the short-term financial market, the financial tightening will continue until the expiration of January March 2024, and the final reaching point of policy interest rates (terminal exchange rate) will be pushed forward intermittently by over 6.0%. With the significant increase in inflation rate and the continuation of the Central Bank of target (2%), BOE’s calculation of maintaining a tightening attitude towards curbing inflation is significant.
■ The increase of Consumer price index (CPI) is predicted by BOE that the salary growth will also accelerate, and whether there is a large space for interest rate increase in the future.
On the 22nd, the Bank of England (BOE) Monetary Policy Committee (MPC) raised the policy interest rate from 4.50% to 5.00%. The decision to raise interest rates was approved by a 7-2 majority, with 13 consecutive occasions since December 2021. The 50bps interest rate hike is the largest since February, and the policy interest rate has reached its highest level since September 2008. President Bailey of BOE pointed out that "the economy is better than expected, but it is still necessary to deal with it because the inflation rate is too high." The statement pointed out that "recent data shows that the inflation process is an important fluctuation factor that lasts for a longer time", and "the secondary effect of domestic prices and wages caused by external cost shocks, eliminating the time required calculation is significant. For the policy path, the traditional guidance is maintained as' further tightening of monetary policy is necessary if sustained inflationary pressure is further demonstrated '.
The rise rate of Consumer price index (CPI) in May, announced by the British Bureau of Statistics on the 21st, was 8.7% year-on-year, unchanged from the previous month. On the other hand, the core CPI excluding energy, food, alcohol, and tobacco increased by 7.1% year-on-year, and the service price CPI also accelerated to 7.4% year-on-year, both of which raised the BOE forecast (in May) to the highest level since 1992. According to human resources consulting firms, the wage increase for British corporate labor in March May (base salary, median) has been at a level of 6.0% since the start of the survey in 1991 and has remained high for five consecutive quarters. In the short-term financial market, the financial tightening will continue until the expiration of January March 2024, and the final reaching point of policy interest rates (terminal exchange rate) will be pushed forward intermittently by over 6.0%. With the significant increase in inflation rate and the continuation of the Central Bank of target (2%), BOE’s calculation of maintaining a tightening attitude towards curbing inflation is significant.