The first time in three years, the Bank of England to vote on monetary policy are divided on raising the base interest rate.
Minutes of the meeting of the 7th of August, which came out on Wednesday, showed that two members of the Committee – Ian McCafferty and Martin Weale – voted to increase the base rate by a quarter percentage point from the current level of 0.5%.
Seven members of the committee, including the bank manager and Mark Carney, chose to leave the rate unchanged at the level at which it has been since March 2009, when the central bank lowered the rate, trying to help the British economy out of recession. Last views on the rates for the vote separated in July 2011.
The pound traded at $ 1.6651 and reached an intraday high of $ 1.6680 after the release of the protocols. On Tuesday, at the close it was worth $ 1.6621.
“We see a large” bullish “rate after voting BOE», which marked a reversal of currency, “which was in a hopeless situation” before the protocols, according to Naeem Aslam, chief market analyst at Ava Trade.Now, when the market sees that “the committee has two aggressive member, it does raise interest rates later this year not so unrealistic.”
Improvement in the labor market and the growth of the UK economy as a whole in recent months, caused rumors that some members of the committee may deem that the economy is ready to raise interest rates.
The presence on the committee of the two “opposition” increases the chances of a rate hike later this year, said Christian Schulz, an economist who became Berenberg. However, there are some caveats: “wage growth has slowed even more since the meeting, and weekly wages in June decreased by 0.2% compared to last year.”
Investors should remember that McCafferty and wil have voted for a rate hike even before these came the disappointing data, “- says Steve Collins of London & Capital Asset Management.
Last week the Bank of England cut its forecast for double wage growth for this year, to 1.25%