Home Daily Commentaries Bank of England deputy governor favours more interest rate increases

Bank of England deputy governor favours more interest rate increases

Friday 25 November, 2022

Daily Currency Update

Bank of England Deputy Governor Dave Ramsden said he would back more interest rate increases yesterday but would consider cutting rates if the economy and inflation pressures improved. Dave Ramsden is the latest member of the Monetary Policy Committee to mention the possibility of cutting interest rates after the Bank of England earlier this month said market expectations for interest north of 5% were too high. The BoE has already raised the UK base rate to 3%, up from 0.25% at the start of this year, and the City expects rates to peak at 4.5% next summer. Ramsden adds that 2022 has been a very challenging year for the UK economy and that higher interest rates are adding to pressures. A Reuters poll published on Wednesday showed a majority of economists thought the BoE will raise rates again next month to 3.5% from 3.0%, although almost a quarter of them said a bigger rate hike to 3.75% was likely.

Key Movers

The US dollar stood close to a three-month low against a basket of currencies and was on track for a weekly loss on Friday, as the prospect of the Federal Reserve slowing monetary policy tightening as soon as December dominated investors’ minds. Minutes from the Federal Reserves November meeting released earlier this week showed that a “substantial majority” of policymakers agreed it would “likely soon be appropriate” to slow the pace of interest rate increases — remarks that sent the USD tumbling.

Expected Ranges

  • GBP/USD: 1.2085 - 1.2155 ▲
  • GBP/EUR: 1.1585 - 1.1645 ▲
  • EUR/USD: 1.0395 - 1.0455 ▲