CITY AM – To hike or to hold

The Fed holds rates: Now it’s the Bank of England’s time to decide

London business newspaper CITY AM SAYS The Bank of England will make a call at noon today on interest rates – with the City split on whether surprise inflation data gives Threadneedle Street cover to pause its rate hike cycle.

The Federal Reserve chose again to hold rates last night, though the body behind the decision warned they were still alive to “signifcant” inflationary pressures.

The City had priced in at least one more interest rate rise this side of the pond, however surprise inflation data released yesterday has complicated matters.

Over the past few weeks rate-setters have pointed to a few key indicators which will influence their decision, many of which seem to be moving in the right direction — albeit slowly.

In yesterday’s data, services inflation fell to 6.8 per cent from 7.4 per cent last month. The Bank has highlighted services because it argues it is a good measure of how embedded inflation has become in the economy.

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