Connect with us

Hi, what are you looking for?

Right Decision NowRight Decision Now

Business

Bank of England expected to make statement as next interest rate hike to be highest in decades

The pound sank to an all-time low against the dollar this morning, and the Bank of England is expected to make a statement this afternoon after calls from the City for immediate intervention to halt Britain’s slide into a currency crisis.

Sterling dropped by 4.9 per cent to $1.0327 — its lowest level since decimalisation in 1971 — as trading opened in Asian markets for the first time since Kwasi Kwarteng, the chancellor, unveiled £45 billion of unfunded tax cuts in an emergency mini-budget on Friday.

The pound regained some ground to $1.07 by mid-morning as trading volumes increased. In a signal that the fall is not simply an indication of dollar strength, the pound also fell 2.4 per cent against the euro to €1.0887.

“Sterling is getting absolutely hammered,” Chris Weston, head of research at Pepperstone, a foreign exchange broker, said. “Investors are searching out a response from the Bank of England. They’re saying this is not sustainable.”

Liz Truss, who has been prime minister for three weeks, has said her government was “incentivising businesses to invest and we’re also helping ordinary people with their taxes”.

Asked on CNN whether she was “recklessly” running up the deficit, Truss said: “I don’t really accept the premise of the question at all.”

After his fiscal statement, the chancellor indicated that his announcements were only the beginning of a government agenda to revive the stagnant economy.

Kwarteng said that the new administration was investigating possible further reductions in income tax and the loosening of immigration rules and other regulations. He has brushed off questions about the market reaction and said he remained focused on achieving annual growth of 2.5 per cent.

The £45 billion tax-cutting package was met with alarm and unease by leading economists, some Tory MPs and financial markets. The Institute for Fiscal Studies think tank said that he was “betting the house” by putting government debt on an “unsustainable rising path”.

Read more:
Bank of England expected to make statement as next interest rate hike to be highest in decades

    You May Also Like

    Business

    The head of the International Monetary Fund has warned of increased risks to the stability of the financial system after weeks of banking sector...

    Business

    The Home Office has made next to no progress in tackling criminal fraud during the past five years, despite it having become Britain’s most...

    Business

    Mark Zuckerberg has laid off more than 11,000 Meta’s employees, about 13 per cent of its global workforce, in what he described as “some...

    Business

    1.22 billion people use Instagram every month. That’s a huge number of Instagrammers trying to hit it big on the platform all at the...

    Disclaimer: rightdecisionnow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 rightdecisionnow.com | All Rights Reserved