{"id":35670,"date":"2022-08-04T09:42:52","date_gmt":"2022-08-04T06:42:52","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=35670"},"modified":"2025-12-09T15:18:33","modified_gmt":"2025-12-09T13:18:33","slug":"boe-to-hike-interest-rates-by-50-basis-points","status":"publish","type":"post","link":"https:\/\/www.ironfx-id.com\/vi\/boe-to-hike-interest-rates-by-50-basis-points\/","title":{"rendered":"BoE to hike interest rates by 50 basis points"},"content":{"rendered":"

The US dollar stabilized yesterday, after a week of underperformance following the FOMC meeting, where the market interpreted a dovish pivot in Fed\u2019s plans mainly because of slowing growth data. This week however, FOMC speakers namely, Minneapolis Fed President Kashkari and San Francisco Fed President Daly pushed back against this idea, coming across with a similar underlying message, that the Fed is not done with interest rate hikes and curbing inflation remains a top priority. Its characteristic that Minneapolis Fed President Kashkari, a well known dove, particularly stated \u201cThe more likely scenario is we would continue raising (interest rates) and then we would sit there until we have a lot of confidence that inflation is well on its way back down to 2%.\u201c Its understandable that when even a dovish policy maker makes such comments that the Fed\u2019s intentions are clearly leaning on the hawkish side, which could provide some support for the greenback as monetary policy differentials could favor it. On the equities front however, we have to note that all three main indexes of the stock market, Dow Jones, Nasdaq and S&P500, were in the greens as the recent earnings reports, reportedly boosted traders\u2019 confidence. Today, we would like to single out the earnings releases of BABA, GPRO, LYFT, and Dropbox, among many other companies, while traders may also keep an eye out for today\u2019s weekly initial jobless claims figure. The pound was trading in the reds yesterday against the US dollar, as well as against the euro but not the yen, without any major moves in anticipation of today\u2019s rate hike decision. The main event for today is BoE\u2019s interest rate decision and the bank is expected to hike rates by 50 basis points, raising the rate from the 1.25% to 1.75%. Also note, that GBP OIS currently imply an 85.2% probability for such a scenario to materialize. Please note that the percentage implied yesterday by GBP OIS for the same scenario accounted to 93.6% and the drop may imply an easing of the market\u2019s hawkish expectations. Should the bank deliver the 50 basis points rate hike and provide a rather hawkish forward guidance for the following meetings, then a case for the pound getting a boost can be reasonably expected. Should the bank fail to deliver 50 basis points rate hike or should the banks forward guidance lie on the dovish side, or even show uncertainty about future rate hikes we may see sterling weakening, given the market\u2019s hawkish expectations about the current and future interest rate decisions.<\/p>\n\n\n\n

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