City eyes on Bank of England ahead of key midday announcement

© PA Wire

Andre Bailey and colleagues are under close scrutiny

– PA Wire

Last night the US Federal Reserve, the most powerful central bank in the world, kept interest rates at nearly zero. But it indicated that rate hikes might come sooner than it had previously suggested, and warned that the economic recovery from Covid is slowing.

Today eyes turn to the Bank of England, which will unveil its latest news at 12pm.

Is the Bank of England’s Monetary Policy Committee going to put interest rates up today?

No. That would be a serious shock to markets if it did. But in the City and far wider than that, there is serious interest, and concern, about what it says on inflation, quantitative easing, and when it might move rates, if not now.

What is its problem?

The Bank, like the Federal Reserve , is dealing with several big issues mostly Covid related: the extraordinary QE (bond buying), needed to support the economy through the pandemic, the rising government debt, and the fact that inflation keeps overshooting its own best guesses.

Why is this difficult?

From Martin Wolf in Wednesday’s FT: “Why are central banks finding their job so hard to do? A common view is that this is because they are imbeciles.”

Mr Wolf doesn’t actually think that they are, but he thinks the era of Covid QE should be over. “We have more than enough money today and bond yields ought to rise a little. When the facts change, central banks should change their minds. That time is now,” he writes.

Is the Bank spooked about energy prices?

Probably, but it will try not to say so. Tom Pugh UK economist at RSM, says: “The MPC will continue to largely ignore moves in volatile energy commodities and focus on the outlook for the underlying economy. Financial markets are getting ahead of themselves in expecting the MPC to hike rates early next year. Instead, the first rate hike will probably come late in the second half of 2022.”

Danni Hewson, AJ Bell financial analyst, said: “One price rise that’s not gone down well in the UK is that of gas and there are big concerns about what the energy sector will look at the end of the winter with two small companies already calling time.  Can those left standing pick up the slack or will additional customers make their sums untenable? Centrica’s shareholders seem to scent opportunity and its share price has risen by more than 5% since the weekend and though SSE has tumbled today it’s still up slightly compared to Friday’s close.  Competition is supposed to be better for the consumer but many of the new kids on the block simply can’t make the current numbers work.”

How bad is inflation?

Inflation climbed to 3.2% in August from July’s 2%, the biggest spike on record.

Ryan Myerberg at Brown Advisory’s Global Sustainable Fixed Income team, said:

“The market has started to price in an increase in Bank Rate throughout the course of next year given the recent jump in inflation, and the potential for it to remain high in the near term, especially given the upcoming increase in regulated energy prices. That said, there’s more than enough uncertainty to the economic picture to allow the MPC to remain in assessment mode without having to signal any specifics to the market with regards to timing. They’ll be very firmly on hold this week, and it’s likely to be one of those meetings where they try to say and signal as little as possible and move on to November.”

What’s so bad about a bit of inflation?

In manageable doses, nothing. It shows the economy is growing and its cuts the value of debt. One effect though is to raise how much the government has to pay in interest costs to service its own borrowings. Yesterday it emerged that government net borrowing was £20.5 billion in August, about £5 billion higher than expected. Interest payments on that debt were £6.3 billion. To be clear: that is a lot and it seems likely to only go higher.

The OECD says inflation will keep rising over the next two years. Managing this will be a “very difficult balancing act”, it says.

Should the Bank put rates up now to curtail inflation?

The point of raising rates is usually to cut demand.The problem presently facing the economy isn’t demand, it is supply.

A crate of goods arriving from China – if it even does – is presently costing more than it did just a few weeks ago.

How does the Bank of England raising rates make that crate cheaper? It is hard to see how it does.

We like to talk about the Bank in all powerful terms, as if were it to just get things exactly right our problems would be over.

Less comfortable to acknowledge is that it has limited powers, especially when the issues are global.

Lately we are running low on food, gas and CO2 among other goods.

What is Andrew Bailey supposed to do about that?

Register now for one of the Evening Standard’s newsletters. From a daily news briefing to Homes & Property insights, plus lifestyle, going out, offers and more. For the best stories in your inbox, click here.

Internet Explorer Channel Network
News Related


Team comes first for Sarina Wiegman after Beth Mead heroics

© PA Wire Beth Mead, left, celebrates with manager Sarina Wiegman after the final whistle (John Walton/PA) – PA Wire England Women manager Sarina Wiegman put the “team accomplishment” above ... Read more »

Obama assails ‘politics of meanness' as he campaigns in Virginia governor race

RICHMOND, VA — Former President Barack Obama exhorted Virginians to support Democrat Terry McAuliffe’s candidacy for governor, warning of the dire consequences for the state and the country if he ... Read more »

Biden Delays Release of Some J.F.K. Records, Citing Pandemic

© George Tames/The New York Times People in Washington reacting to the assassination of President John F. Kennedy on Nov. 22, 1963. The pandemic has created backlogs for multiple federal ... Read more »

Highlights! ‘Robocop' Ends Park In Wild Slugfest

WHAT. A. FIGHT. [ #UFCVegas41 live on #ESPNPlus ] — UFC (@ufc) October 23, 2021 Gregory Rodrigues found the staple win he was looking for earlier today (Sat., Oct. ... Read more »

Leslie Jordan Recounts Childhood Summers Spent at the Bookmobile: 'Probably the Greatest Gift'

For Leslie Jordan, being encouraged to read was “probably the greatest gift my mother ever gave me.” © Provided by People National Celebration of Reading Speaking with PEOPLE on Thursday ... Read more »

76ers haven't asked Nets about Ben Simmons-Kyrie Irving trade yet, per report

The season hasn’t opened quite as smoothly as either the Brooklyn Nets or the Philadelphia 76ers have hoped. Brooklyn, playing without Kyrie Irving, was blown out of its opening night ... Read more »

Join fight against terror, Amit Shah urges J&K youth

© Provided by The Times of India SRINAGAR: Home minister Amit Shah asked officials during a security review in Srinagar on Saturday about the targeted killings of minority community members ... Read more »

College football overtime rules 2021: Explaining how the new OT format works

Overtime is going to look a little bit different in college football games during the 2021 season. The NCAA has once again made some minor tweaks to its overtime rules. ... Read more »

Wake Forest, Army Shootout Shatters Over/Under Pregame Line For Game Point Total

© Provided by Sports Illustrated The game did not have a single field goal and the third quarter featured 21 points in the span of 48 seconds. In total, 18 ... Read more »

NFL fines CeeDee Lamb, Connor Williams, Trevon Diggs

© Provided by NBC Sports It was an expensive win for three Cowboys players last week, according to NFL Media. Cowboys cornerback Trevon Diggs, who had a pick-six late in ... Read more »

Strictly Come Dancing fans in stitches over 'wet' remark after John Whaite dance

Strictly Come Dancing fans have been left in stitches after a friend of John Whaite reacted to his and Johannes Radebe’s performance. The BBC One dance show’s first male same-sex ... Read more »

Rogers rejects possible meeting between ex-chair and his preferred board appointees

TORONTO — The bruising battle for control of Rogers Communications Inc. continued on Saturday, with the company claiming its recently ousted chairman intends to hold a weekend meeting with a ... Read more »

MotoGP Emilia Romagna Grand Prix – Start time, how to watch & more

© Gold and Goose / Motorsport Images Francesco Bagnaia, Ducati Team The Ducati rider claimed his fourth consecutive pole position by progressing through Q1 and storming the pole shootout in ... Read more »

Indo-Bangla ties deeper than any strategic alliance: Shringla

© Provided by The Times of India BENGALURU: Foreign secretary Harsh Vardhan Shringla on Saturday said the ties between India and Bangladesh were deeper than any other strategic partnership, and ... Read more »

Cristiano Ronaldo backs Manchester United to adapt and overcome slow start

© Provided by WION Manchester United’s players need time to adjust to each other and their playing styles, forward Cristiano Ronaldo said, encouraging his team to overcome their inconsistent start to the ... Read more »

Lalu Prasad likely to hit campaign trail

© Provided by The Times of India PATNA: RJD chief Lalu Prasad will reach Patna on Sunday after a gap of over three years. He will land at the airport ... Read more »

‘Conscious possession' not proved, NCB-accused freed

© Provided by The Times of India MUMBAI: Upholding an acquittal in an NCB case over an alleged haul of mandrax tablets 30 years ago, the Bombay HC recently held ... Read more »

Nigerian gunmen use dynamite to break into prison, free over 800 inmates

Gunmen attacked a jail in Nigeria’s Oyo State late on Friday and freed over 800 inmates by force, the third such major attack this year, prison service said in a ... Read more »

ED to probe Kerala church land deals

© Provided by The Times of India KOCHI: The Enforcement Directorate has launched an investigation into the controversial land deals of the Ernakulam Angamaly archdiocese. The ED has registered an ... Read more »

Fazilka double murder: 14 accused still at large

© Provided by Hindustan Times The Moga police have booked 17 persons for the Fazilka double murder and arrested only three of them so far. (AFP) Six day after the ... Read more »

Ludhiana: Income tax raids continue for third day

© Provided by Hindustan Times Police personnel deployed outside a house in Model Town area during income tax raids in Ludhiana on Thursday. (HT FILE) Income-tax (I-T) raids on bicycle ... Read more »

Injured film director Joel Souza “gutted” by death of cinematographer Halyna Hutchins

© via REUTERS Film director Joel Souza A film director who was injured when Alec Baldwin fatally shot a cinematographer with a prop gun has broken his silence following her ... Read more »

Disabled people struggling to hire carers after Brexit

© Provided by The Guardian Photograph: Sophia Evans/The Observer Disabled people are struggling to hire carers to help with vital daily tasks due to low pay and Brexit, the Observer ... Read more »

Holidaymakers may need three Covid vaccines to travel abroad next summer

© PA Wire A record 234,000 booster vaccine bookings were made on Wednesday, says health minister. – PA Wire Holidaymakers may need three doses of the Covid vaccine if they ... Read more »

Tulsi Gabbard rails against 'establishment elite'

There is a bigger problem in politics than partisanship — that’s according to former Rep. Tulsi Gabbard. © Provided by Washington Examiner The Hawaii Democrat, who ran for president in ... Read more »

Maynilad moves water service interruptions to Oct. 29 to Nov. 1

© Danny Pata Residents of TS Cruz in Almansa Dos, Las Piñas City, fetch water from a deep well on Thursday, May 2, 2019, following a water service interruption of ... Read more »

Obama gives fiery speech for McAuliffe: 'Don't sit this one out'

RICHMOND, Va.- Former President Obama delivered a fiery address campaigning for Virginia Democratic gubernatorial nominee Terry McAuliffe on Saturday, urging Democrats to flock to the polls and taking a number ... Read more »

Volvo C40 Recharge review: the sleek and swift coupe-crossover

Volvo is doing its bit to save the planet, and it has an ambitious plan for a zero emissions future. Volvo C40 Recharge By 2025, 50% of its global sales ... Read more »

Chris Kane 'lucky' over Celtic flashpoint as Sportscene pundits deliver red card verdict

Chris Kane has been told he was “very lucky” to escape a red card against Celtic. The St Johnstone striker became involved in an incident with defender Cameron Carter-Vickers during ... Read more »

Tyler Lockett Player Prop Bets for NFL Week 7 - Seattle vs. New Orleans

Discover player props odds, plays, and insights for Tyler Lockett in his Week 7 contest with the Seattle Seahawks against the New Orleans Saints. © Provided by Sports Illustrated Oct ... Read more »

Texans activate Kevin Pierre-Louis from injured reserve

© Provided by NBC Sports The Texans activated linebacker Kevin Pierre-Louis from injured reserve Saturday. He returned to practice Oct. 6, so the Texans were approaching the end of the ... Read more »

Falling Into Your Smile lead star Xu Kai, bet din ng Pinoy fans

© Provided by Ang original soundtrack album [OST] ng Falling Into Your Smile ang isa sa mga sinasabing dahilan kaya tinangkilik ng publiko at nagtagumpay ang nabanggit na Chinese ... Read more »

Minister says pandemic help, including military support, approved for Saskatchewan

OTTAWA — Public Safety Minister Bill Blair says the federal government has approved a request for pandemic aid in Saskatchewan, including military support. © Provided by The Canadian Press Blair ... Read more »

What's Your Favorite Olivia Rodrigo ‘Sour' Music Video? Vote!

Read more »

Lala Kent celebrates three years of sobriety

© Bang Showbiz Lala Kent Lala Kent is celebrating three years of sobriety. The 31-year-old star has taken to Instagram to celebrate the landmark moment, posting a photo of herself ... Read more »

The Kapil Sharma Show, October 23, 2021, Written Update: A tribute to legend Jagjit Singh

© Provided by Pinkvilla As the episode starts, Kapil Sharma welcomes everyone on the show. He gives Archana a heads-up that today’s episode will be blessed with some beautiful music. ... Read more »

17 PU teachers named among top 2% scientists in world by Stanford

© Provided by Hindustan Times Two lists have been created for the top 2% scientists; the first list is based on the career-long data, wherein PU’s 17 scientists have featured. ... Read more »

Aides of Captain Amarinder, Sidhu in Twitter war over ex-CM's Pakistan friend

© Provided by The Times of India CHANDIGARH: Former Punjab CM Captain Amarinder Singh’s media adviser Raveen Thukral and Punjab Congress chief Navjot Singh Sidhu’s adviser Mohammad Mustafa got into ... Read more »

Strictly's Dan Walker supports co-star Adam Peaty after 'almost kiss' with Katya Jones

Breakfast host Dan Walker and his wife have laughed off the furore over his Strictly co-star Adam Peaty’s “almost kiss” with professional partner Katya Jones. The BBC star says Sarah, ... Read more »

Court extends Singhu lynching accused's police custody by two days

© Provided by Hindustan Times Counsels for the four accused opposed the prosecution plea in court and contended that the police had recovered weapons used in the crime, blood-stained clothes ... Read more »
On you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic