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Bank of England governor hints at potential for more activist approach to rate cuts, causing Pound to decrease – live updates on the business world


The pound has dropped to a two-week low after Bank of England governor Andrew Bailey hinted at the possibility of more aggressive interest rate cuts. In an interview with the Guardian, Bailey stated that if inflation remained low, the central bank could become more activist in cutting rates, potentially leading to a rate cut in early November. The pound fell 0.8% against the US dollar to $1.3185, its lowest level in weeks. Bailey also highlighted the importance of monitoring geopolitical risks, particularly in the Middle East, and their potential impact on global markets. Following his comments, the likelihood of a rate cut in November increased to 96.5%. The news also prompted a rally in UK homebuilders’ shares as lower interest rates could boost demand for homes. The pound’s decline is attributed to both Bailey’s comments and external factors such as safe-haven flows into the US dollar amid rising geopolitical tensions. Overall, Bailey’s remarks have increased market expectations for a rate cut, leading to a further decline in the pound against major currencies. Additionally, UK businesses have trimmed their inflation expectations, suggesting a favorable outlook for monetary policy. Bailey’s comments have caused fluctuations in the currency and government bond markets, with investors pricing in deeper rate cuts in the coming months.

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Photo credit www.theguardian.com

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