GBP 
The Bank of England’s Monetary Policy Committee was yesterday split about when
to raise interest rates. Two members, Martin Weale and Ian McCafferty, broke
with consensus and voted to raise borrowing costs by 25 basis points, to 0.75%.
They believe that the UK economy is strong enough to justify an immediate rise
in the interest rate and that earnings across the UK economy are likely to pick
up in the months ahead, meaning the Bank of England should start to tighten
monetary policy now. 

GBP 
The Bank of England’s Monetary Policy Committee was yesterday split about when
to raise interest rates. Two members, Martin Weale and Ian McCafferty, broke
with consensus and voted to raise borrowing costs by 25 basis points, to 0.75%.
They believe that the UK economy is strong enough to justify an immediate rise
in the interest rate and that earnings across the UK economy are likely to pick
up in the months ahead, meaning the Bank of England should start to tighten
monetary policy now. 

Other members voted to keep interest rates at 0.5% because they believe there
is insufficient evidence of inflationary pressures to justify a rate rise. This
was backed up by Tuesdays fall in inflation. They want to leave interest rates
at their record low of 0.5% until there are clear signs that wages are rising.

The news is significant because it is the first time that Britain’s monetary
policy has been split over interest rates since 2011 (rates have been unchanged
at 0.5% since March 2009). The pound has jumped half a cent against the US dollar,
to $1.6665 as the news was announced. 
.
USD
The minutes from the Federal Reserve yesterday also showed the USA may look to
increase interest rates sooner than expected. The Fed said yesterday that it
may be appropriate to remove monetary policy accommodation if the Feds goals
were met earlier than it was forecast. Recent good jobs data has added weight
to this argument.

Key Announcements:

EUR – 9:00 – German Markit Services PMI expected to fall to 55.5
EUR – 9:00 – German Manufacturing PMI expected to fall to 51.8
GBP – 9:30 – Retail Sales expected to rise by 0.4%
USA – 1:30 – Initial Jobless Claims expected to fall to 299K

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