The Bank of England received the memo from global Central Banks and fell into line. The Bank of England had received a wake-up call, with inflation surging to record levels, but their failure to act and cut QE, will cost the British economy dearly. The Central Bank left interest rates and QE unchanged, citing the deteriorating economy and reviewing growth forecasts lower. The UK is experiencing an energy crises, with shortages due to insane green energy policies, which have resulted in shortages and massive spikes in prices. This has fed the inflation bonanza. The Bank reviewed Q3 GDP back from 2.9%, to 2.2%. The energy crises will serve as a double whammy, coming into Winter, hitting consumers and business and driving inflation through increased costs across the economy. Rising inflation and flagging growth = stagflation. The Bank of England chose to ignore inflation and to follow the Fed’s line of monetary expansionism.
The impact on the GBP was minimal, as all currencies lose their integrity, through massive expansion of the money supply. The GBP traded 1.3730, while the EUR held 1.1740, despite weaker than expected PMI data. The expansive monetary policy only lifts commodity prices, so the associated currencies managed to eke out gains. The AUD looks to regain 0.7300, while the NZD bounced over 0.7050, ahead of key trade data.
Look for local markets to trade on continued fallout from the FOMC and B of E, while Japanese inflation and PMI data might serve up some domestic interest?