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Bank of England Votes Unanimously to Lower the Benchmark Interest Rate, Further Easing to Follow (Update)
Wednesday, 22 October 2008 08:39:31 GMT  |  DailyFX Research
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The BoE minutes from the October 8 meeting showed a unanimous vote in favor of the 50 bp rate cut. The MPC noted that inflation risk had moved decisively to the downside and the minutes said that "the reduction in Bank Rate that would ultimately be required to meet the inflationary target was very difficult to gauge". The minutes also acknowledged that although inflation could stay high for a while, the risk of second round effects have diminished due to the weaker economic outlook. We expect the BoE to lower the repo rate to 4.00% by the end of the year and to loosen monetary policy further next year.

Meanwhile, Pound-Dollar (GBPUSD) consolidated ahead of 1.6300 after sharp price swings, which saw a recovery rally to 1.6428 and a subsequent fall to 1.6250 before prices settled down. The ex-MPC member Wadhwani reportedly called for a 100 bp cut next month, which followed the calls for more aggressive action from the BoE in the press.

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