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To: Johnny Canuck who wrote (56737)	6/22/2023 11:10:31 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 67936

Economic Report Bank of England hikes rates to 5% in 13th straight increase and says more hikes may be coming Last Updated: June 22, 2023 at 9:23 a.m. ET First Published: June 22, 2023 at 7:41 a.m. ET By Barbara Kollmeyer comments A member of the public runs through heavy rain near the Bank of England after the central banks interest rate announcement on May 11, 2023 in London, England. The central bank hiked interest rates again on Thursday, its 13th straight increase. Dan Kitwood/Getty Images Referenced Symbols GBPUSD -0.23% TMBMKGB-10Y 4.397% This feature is powered by text-to-speech technology. Want to see it on more articles? Give your feedback below or email audiofeedback@marketwatch.com. The Bank of England made its 13th consecutive interest rate hike on Thursday, moving for a 50 basis-point rate hike that will bring its key bank rate to 5%, and said further hikes may be needed. The news gave the pound GBPUSD, -0.23% a 0.3% boost to $1.2734, while the yield on the 10-year gilt TMBMKGB-10Y, 4.397% fell 3 basis points to 4.371%. The market was roughly divided between expectations for a 25 and 50 basis point hike. The Bank of England’s Monetary Policy Committee (MPC) voted 7 to 2 in favor of a hike. Expectations for a bigger increase were heightened after data on Wednesday showed U.K. consumer prices rising a hotter-than-expected 8.7% in May, disappointing economists’ expectations for an ease to 8.4%. Core inflation, which strips out volatile food and energy prices, climbed 7.1% to the highest annual rate since March 1992. But the MPC said in the minutes accompanying the rate hike that it wasn’t just inflation that motivated another tightening, as they cited stronger employment growth than at the time of their May meeting. “The counterpart to this strong employment growth has been a further fall in the inactivity rate. The unemployment rate has been flat at 3.8%, in line with the May Report. The vacancies-to-unemployment ratio has fallen further but remains significantly elevated,” said the MPC, which added that wages have also picked up. Policymakers said they expect consumer prices to “fall significantly” during the course of the year, mainly due to energy prices, with food prices also falling. “The MPC will continue to monitor closely indications of persistent inflationary pressures in the economy as a whole, including the tightness of labor market conditions and the behavior of wage growth and services price inflation. If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required,” it said. Analysts said the Bank of England wasn’t left with much choice this month, but that they would need to proceed cautiously to not upset the economy. “The Bank of England has opted to aggressively tighten policy and launched a rate grenade at the specter of ongoing inflation,” said Neil Birrell, chief investment officer at Premier Miton Investors, in a note to clients, adding that the central bank had to “act tough,” after Wednesday’s inflation data. “The size of this hike is, however, a surprise. The fear is that this could rapidly tip the economy into a recession, but that is obviously not deemed to be as bad an outcome as the risk of ongoing elevated inflation,” he said, in a note. “Markets already turned their eye to UK fiscal credibility last autumn, and promises in the run-up to the next elections could be another catalyst. We were underweight U.K. gilts for the past six months, during which yields rose by more than 120 basis points,” added Vivek Paul, U.K. chief investment strategist at BlackRock Investment Institute, in a note. “But now, following these rises, we find them relatively more attractive than U.S. Treasuries: the cumulative tightening markets expect over the next two years seems too high in the U.K., whereas it seems too low in the U.S..”