UK interest rate dissenter signals policy divergence may be coming to an end

As expected, the Bank of England left rates unchanged at a record low 0.25% in today’s Monetary Policy Committee decision. There was a dissent, however, with soon to be departing MPC member Kristin Forbes wanting a quarter-point rise. She indicated that she believes the risks of currency-induced inflation have become too great to stand pat. What’s more, some other MPC members voiced similar concerns, suggesting a shift in policy outlook is in the making.

Why it matters: Though the UK is a special case because of Brexit-induced currency weakness, the fact it has shifted to a tightening bias is significant. This shift is the first indication that the Fed is no longer alone in tightening. The great monetary policy easing may be coming to an end. This would have an impact on the US dollar and anything denominated in dollars. Watch for any hawkish signals from the European Central Bank as a gauge.


Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.