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The Bank of England is set to raise its key lending rate for only the second time since the global financial crisis later Thursday, even as the economy continues to lag its European peers amid uncertainly surrounding Brexit and the escalating risks linked to trade and tariff disputes with the United States. 

The BoE's Monetary Policy Committee voted 9-0 to lift the key rate to 0.75%, the highest in a decade, but said future hikes would be "gradual" and noted that the U.K.'s near-term outlook has evolved broadly in line with its previous forecast of 1.75% GDP growth for the full year.

"The Committee also judges that, were the economy to continue to develop broadly in line with its Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2% target at a conventional horizon," the Bank said. "Any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent."

The pound was marked 0.25% higher against the U.S. dollar at 1.3110 immediately following the release, a less-than-expected gain given the unanimity of the MPC's decision. It's also down around 1.65% over the past month, even as the Thomson Reuters Bank of England Watch tool, which assigns rate hike probability based on current market trends, had suggested a 91.51% chance of a rate move today in London.

The pound's moves may reflect weakening growth prospects in the world's fifth-largest economy, particularly in the country's manufacturing sector, where sentiment fell to the lowest level in two years last month, according to PMI data from IHS Markit. Britain's economy, however, is far more fuelled by services and consumer spending, and flat wage growth, alongside slowing inflation, suggests little signs of acceleration there, either.

U.K. inflation slowed notably in June, Britain's Office for National Statistics said earlier this month, as consumer prices rose 2.4% higher on an annual basis, a figure that fell short of the consensus forecast of 2.6%. That slide comes even as motor fuel prices hit a near four-year high, thanks to the surge in global crude prices, suggesting underlying pricing strength is starting to erode amid the uncertainty over the country's post-EU future.

"Consumers have been feeling the benefit of the summer clothing sales, and computer game prices have also fallen. However, gas and electricity, and petrol prices all rose, with consumers seeing the highest price at the pump for nearly four years, with inflation remaining steady overall," said ONS statistician Mike Hardie. "House prices rose at their slowest pace in nearly five years due to slower annual growth in the south and east of England. However, this was partially offset by the buoyant property market in the Midlands."

Growing trade protectionism, which has trimmed stock market gains and slowed growth prospects in Europe and Asia, are also likely to add to Britain's myriad headwinds going forward, a view echoed by Carney earlier this week in an interview with Bloomberg television.

"We can choose between a low road of protectionism focused on bilateral goods-trade balances and a high road of liberalization of global trade in services," he said. "The low road will cost jobs, growth, and stability. The high road can support a more inclusive and resilient globalization."

With President Donald Trump pressing for higher tariffs on China-made goods, while vowing to renegotiate existing trade deals with Canada, Mexico and the European Union -- all the while taking shots at Primer Minister Theresa May for not following his advice on Brexit -- it's hard to square Carney's "low road" analysis with higher U.K. rates.

"While we still believe the Bank of England is too optimistic on the inflation outlook, it seems that Mark Carney and company are more concerned about overheating the economy," said Danske Bank analyst Mikael Olai Milhøj. "Despite growth on average being lower now than before the Brexit vote, it is still sufficient to absorb the remaining slack, as potential GDP growth has declined as well."

"Like many other central banks around the world, the Bank of England believes in the Phillips Curve and thinks underlying inflationary pressure is increasing as the labour market continues to tighten," he added.