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Pound falls despite rate hold amid BOE caution
A report indicates that the British pound has declined against the US dollar despite the Bank of England maintaining interest rates at their current levels, amid market movements based on the minutes from the recent meeting, which revealed a more cautious tone and a tilt towards financial tightening. The minutes highlighted that inflation risks have increased since July, with forecasts suggesting that inflation could reach around 3.75% in the last quarter of 2026 and surpass 4% in early 2027, driven by rising energy prices resulting from the conflict in the Middle East. Meanwhile, the Monetary Policy Committee kept its holdings of government bonds unchanged, with an annual sales plan close to 20 billion pounds, reflecting a move towards monetary tightening—even though some members preferred to raise interest rates further. Conversely, the Federal Reserve’s decision to raise interest rates by 25 basis points was supportive of the dollar, with expectations that Fed members will continue increasing rates throughout the year, thus strengthening the dollar against major currencies.
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