Central bank poised to speed up tapering while UK inflation hits a 10-year high, piling pressure on the Bank of England
London — Investors pressed paused on Wednesday to see what the Federal Reserve will do to dampen inflation, while a leap in consumer prices to a 10-year high in Britain piled pressure on the Bank of England to act on Thursday.
The Fed is expected to announce at 7pm GMT that it is speeding up the end of its pandemic-era bond purchases and signal a turn to higher interest rates next year as a guard against inflation that’s at the highest in almost 40 years. “But with Covid still casting that long shadow it could mean we have a situation where the rebalancing between goods and services demand takes longer, which means goods inflation could persist,” Riley said.
“It’s all eyes on the Fed, but the UK inflation data is an absolute disaster for the Bank of England — to all intents and purposes they should be hiking rates, but the problem is Omicron and the uncertainty around that,” said Michael Hewson, chief markets analyst at CMC Markets.
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