Today, the Bank of England is expected to raise interest rates in the UK by 25 basis points. The move
Today, the Bank of England is expected to raise interest rates in the UK by 25 basis points.
The move comes in spite of more recent signs indicating a struggling British economy. Analysts are especially concerned about the current state of manufacturing in the UK, which composes approximately 10% of the economy. Factories lost momentum in July, with the UK’s Purchasing Managers’ Index (PMI)—a key indicator of economic health for manufacturing and service sectors—slipping to its second-lowest level since late 2016.
While manufacturing clearly is a facet of the UK’s economic concerns, the greater issue appears to be the UK’s uncertain exit from the European Union—now less than eight months away. With negotiations over what “type” of Brexit still up in the air and the survival of PM Theresa May’s pro-Brexit government still in question, investors continue to look to the Bank of England and other market indicators for answers.
However, the interest rate decision today is likely to be far from unanimous. With future rate hikes still uncertain, it is unclear to what extent the Bank of England will leave investors at ease.