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MNI STATE OF PLAY: BOE Hikes, Two Doves Dissent From Guidance

(MNI) London

The Bank of England Monetary Policy Committee hiked by 25 bps but was split over the scale of the hike and over policy guidance

The Bank of England raised its benchmark rate by 25 basis points as expected at its May meeting, but the Monetary Policy Committee split three ways as forecasts showed inflation continuing to rise even as growth falters, with two members dissenting from guidance that further tightening might be needed in coming months.

The MPC's projections showed inflation peaking at just over 10% in October but also sliding back to 1.3% at the end of the three-year forecast for the biggest projected undershoot since the wake of the financial crisis. Output is expected to be nearly flat next year, assuming rates follow the market path.

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The Bank of England raised its benchmark rate by 25 basis points as expected at its May meeting, but the Monetary Policy Committee split three ways as forecasts showed inflation continuing to rise even as growth falters, with two members dissenting from guidance that further tightening might be needed in coming months.

The MPC's projections showed inflation peaking at just over 10% in October but also sliding back to 1.3% at the end of the three-year forecast for the biggest projected undershoot since the wake of the financial crisis. Output is expected to be nearly flat next year, assuming rates follow the market path.

Keep reading...Show less