by the Bank of England. While problems or BoE policymakers and the UK government are galloping as inflation looks extremely sticky above 8.5% and tight monetary policy is failing to do the expected job.Pound Sterling finds strength as United Kingdom’s economic prospects are improving despite higher interest rates from the Bank of England.
The Bank of England warned commercial banks on Monday that they may be underestimating their exposure to private equity and to commodity markets at a time when rising interest rates could squeeze liquidity in the market, as reported by Reuters. Contrary, BoE policymaker Silvana Tenreyro is opposing further increases in interest rates as risks having to make a sharp U-turn if it tightens policy anymore.
Later this week, investors will focus on the Federal Open Market Committee minutes and the employment data to be released by the US Automatic Data Processing . When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money.
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