Bullish of England Bank sends pound skywards after growth upgrade

 

Bank of England rate-setters sent the pound surging today as they struck a bullish note on the recovery and hiked growth forecasts.

Sterling moved close to $1.60 against the dollar as minutes of the latest monetary policy committee meeting revealed the Bank’s economists predict a 0.7% advance in the current quarter following a run of strong data — up from 0.5% just a month ago.

The minutes also showed the MPC, chaired by Mark Carney, pictured, backing away from a further boost for the economy as the recovery takes hold with no members judging extra stimulus was “appropriate at present”. This contrasts with month earlier when some rate-setters believed there was a “compelling case” to do more. In June, three members — Paul Fisher, David Miles and former Governor Lord Mervyn King — were voting for more money-printing.

Markit chief economist Chris Williamson said: “The minutes showed waning support for more stimulus... the UK economy has moved up a gear in recent months, buoyed by numerous factors, including a revival in its main trading partner, the eurozone.

The single currency area saw its economy pull out of recession in the second quarter, with GDP expanding 0.3%. Meanwhile, at home consumer confidence has risen to post-crisis highs, fuelled at least in part by a housing market upturn, and business is showing signs of booming.”

The Bank’s growth upgrade brings it broadly into line with City forecasters but more positive recent survey evidence suggests the economy’s pace could even come close to 1% in the current quarter.

Concerns have risen over the role of the housing market in fuelling the recovery, although the minutes showed rate-setters would only provoke serious worries “if a period of rapid real house price increases appeared in prospect”.

Markets are currently betting the Bank will raise rates earlier than planned under its new forward guidance regime. The MPC will consider hikes if unemployment — currently 7.7% — reaches 7%. UK short-term borrowing costs have risen alongside US yields as the good news rolls in, but HSBC economist Simon Wells said the MPC appeared comfortable with this. “There was no mention of recent market rate rises being ‘unwarranted’, he said. But the minutes showed that rate-setters were keen to stress the 7% level was a threshold for considering further action rather than a definite trigger for rate rises.

Start your day with The Independent, sign up for daily news emails
News
A poster by Durham Constabulary
news
Arts and Entertainment
books New York Times slammed over summer reading list
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine