Bank of England Is Right to Take a Softly, Softly Approach on Rates
UK policy makers are acting more cautiously than their central banking peers in tightening monetary conditions.
Andrew Bailey and his fellow central bankers face a serious challenge.
Photographer: Hollie Adams/BloombergThe Bank of England acted cautiously by raising its official rate by 50 basis points to 2.25% on Thursday. However, that doesn't mean it won't step up the pace at its next quarterly economic review on Nov. 3, as it has made clear its determination to wrestle runaway inflation down to its 2% target. The global rate-hiking cycle is far from over, as the Federal Reserve illustrated on Wednesday with its third consecutive 75 basis-point jump.
With three of the nine members of the Monetary Policy Committee voting for a larger 75 basis-point hike, it won’t take much bad inflation news to prompt a more aggressive move from the BOE next time. For now, caution is warranted.