Today’s Bank of England Monetary Policy Decision

The US Federal Reserve on Wednesday said it was on track to end its pandemic-era bond purchases by March, as the central bank kept interest rates at historic lows.

The Federal Open Market Committee decided to keep the target range for the federal funds rate at 0.00% to 0.25%.

However, the Fed said it would reduce its purchases of Treasury securities by USD20 billion per month and for mortgage-backed securities by USD10 billion, from the current USD120 billion a month that the central bank currently is buying.

This paves the way for the end of its pandemic-era bond purchases in March, as policymakers at the Fed envisage three interest rate hikes by the end of 2022, with further increases in rates expected in both 2023 and 2024.

boohoo on Thursday became the latest UK retailer to warn that the rise in the Omicron variant of Covid-19 is harming sales ahead of Christmas.

The AIM-listed online fast-fashion retailer cut annual sales and margins guidance due to Omicron uncertainty and as a high product returns rate hits net sales. It also has seen “continued disruption” hit online deliveries alongside persistent virus-related cost inflation.

Up next, the Bank of England announces its latest monetary policy decision at 14.00 GMT+2, before the European Central Bank at 15.30 GMT+2.

The UK interest rate decision later today is poised on a knife-edge, with the implications of the variant, high inflation, continued pressure given tightness in the labour market, and supply chain bottlenecks all being taken into consideration. While any such hike would likely be moderate, and with a time lag until it washed through to the wider economy, it would nonetheless signal that inflation needs to be tackled. Even so, the current uncertainty regarding the variant threatens to derail the UK’s economic recovery and the consensus remains that the Bank of England will sit on its hands until the February meeting when the picture may be clearer.

 
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