Symbolic imageBank of England raises rates to 4% and signals more
The Bank of England raised its key rate by 25 basis points to 4% on Thursday, its first hike in three years. It warned that further increases may follow.
The Wall Street Journal ties the decision to the Iran war, calling it the first hike since the war began. Handelsblatt reports the vote was eight to one, with external member Catherine Mann dissenting in favour of 50 basis points, while Bloomberg's headline calls the hike unanimous. Handelsblatt says further steps depend on energy prices and inflation, and Governor Andrew Bailey sees arguments for another rise if inflation risks persist. The Financial Times describes a hawkish change in tone and fears of second-round inflation effects, and Bloomberg reports the bank now sees inflation at 4.9%.
Pound firm, ECB next
Markets barely reacted because the move was priced in, Handelsblatt reports, and the pound rose slightly to about 1.35 dollars and 1.20 euros. In recent weeks it reached its highest level against a basket of currencies since the Brexit referendum ten years ago. Bloomberg reports that ECB policymaker Zigman sees a "rather big chance" of a December hike.