About Bank of England (BOE)
Bank rate 4.00%
Governor Andrew Bailey
Head quarters Thread needle Street, London
What is Bank of England?
Bank of England is a Central Bank of the United Kingdom which was formed in 1694. Bank of England is responsible for setting the Bank Rates and also to maintain the Monetary Policy. Bank of England does not hold accounts for the public or issue loans to the public. BOE is usually priced in and overshadowed by a Monetary Policy Summary, which focuses more on the future. BOE Interest Rates is the rate at which the bank lends to financial institutions over night. Short term Interest Rates are a very important factor in currency valuation.
Why do Central Banks hike the Interest Rates?
When the economy is growing at a rate that may lead to hyperinflation (monetary inflation occurring at a very high rate). Today at 2 pm (S.A time) BOE is expected to hike its Interest Rate by 25 basis points from the current 4.00% to 4.25% and issue the Monetary Policy Summary at the same time.
Why do Central Banks cut the Interest Rates?
The Central bank may cut the Interest Rates to encourage people to borrow more money at a lower rate, be it for new houses or businesses. The aim is to also make saving money less attractive as the returns are lower when the rates are cut.
Why Do We (traders) Care About Rate Decisions?
Short term Interest Rates are the paramount factor in currency valuation and when they are cut or hiked, that has a direct impact in the currency as it responds accordingly. Traders also look for clues in the Monetary Policy summary as it focuses more on the future. If you wish to learn how to trade Interest Rates, read and understand Central Bank’s Monetary policy and press conferences, send me a WhatsApp at +27 78 144 6851 for private lessons, mentorship and coaching. Below is BOE’s annual schedule.
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