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Bank of England Vows to Raise Rates as Much as Needed as Pound Slumps

Economy Sep 26, 2022 12:06PM ET
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By Geoffrey Smith

Investing.com — The Bank of England said it won’t hesitate to raise interest rates as needed, hurrying to reassure markets spooked by the plans of the new government under Prime Minister Liz Truss.

Truss’s finance chief Kwasi Kwarteng had unveiled the biggest tax cuts in 50 years in an effort to kickstart growth in an economy hobbled by an energy crisis as well as the after-effects of Brexit and the Covid-19 pandemic.

However, markets have viewed the plans as unsustainable and inflationary, pushing the pound to an all-time low against the dollar and sending government bond yields skyrocketing. The pound fell to $1.034 earlier Monday and then ticked higher. It was down 1.6% at $1.067 in recent trading.

“The [Monetary Policy Committee] will not hesitate to change interest rates as necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit,” the Bank said in a statement.

It repeated that it “will make a full assessment at its next scheduled meeting of the impact on demand and inflation from the Government’s announcements, and the fall in sterling, and act accordingly.”

The MPC’s next meeting is scheduled in November.

Bank of England Vows to Raise Rates as Much as Needed as Pound Slumps
 

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Comments (4)
Sol Wein
Sol Wein Sep 26, 2022 4:19PM ET
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All talk
Haroon Ahmed
Haroon Ahmed Sep 26, 2022 3:51PM ET
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Weren't they suppose to crash the Ruble :) oops
Desire Forku
Desire Forku Sep 26, 2022 3:51PM ET
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don't say it aloud
Maximus Maximus
Maximus Maximus Sep 26, 2022 3:51PM ET
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No, they were supposed to crash the russian military machine. and they have successfully done so
Péter Pataki
Péter Pataki Sep 26, 2022 2:46PM ET
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Why need to wait for the next meeting? BoE should call an emergency meeting in order fight immedietly against the weaking pound
Raihan Ruhin
Raihan Ruhin Sep 26, 2022 1:03PM ET
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how about intervention like Japan did few days earlier?
Mr Doodl
Mr Doodl Sep 26, 2022 1:03PM ET
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Intervention will not help much.See JPY is still 144. But BoE might be forced to an emergency rate hike if GBP plunges further.
 
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