14 June 2022 - Bank of England to hike rates as economy contracts!

This week’s Bank of England will hike interest rates, by twenty-five basis points, despite data being released yesterday that showed that the economy has officially begun to contract. GDP contracted by 0.3% in April, while both manufacturing and industrial output also fell. While it is too early to say that the economy is in free fall, there is little doubt now that Q3 may mark the beginning of a recession. Given the headwinds that the country still faces, it is possible that the slowdown in output could last until at least the end of the year. There was a drag on economic activity created by the phasing out of Coronavirus vaccination programmes, but even if they still existed, GDP would only have been 0.1%. This shows that the real economy is slowing at a considerable rate. With the Bank of England still committed to the fight to reduce inflation and the country seeing fuel prices rise every day, they will be faced with the unenviable task of throwing petrol on the fire. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.