Bank of England rate hike pause back on the table after inflation surprise

Bank of England rate hike pause back on the table after inflation surprise

In August, the Bank of England increased interest rates for the 14th time in a row.

Alexander Spatari | Moment | Getty Images

LONDON — The Bank of England’s next monetary policy move is now wide open, following a significant downside surprise in the August inflation print out earlier on Wednesday.

Prior to the August consumer price index reading, the market was pricing in an 80% chance that the central bank would hike interest rates by 25 basis points on Thursday to 5.5% — the highest level since December 2007.

Market pricing swung drastically after the annual headline CPI print fell to 6.7% in August from the 6.8% of July, defying a consensus forecast that it would rise to 7%.

Shortly after 10 a.m. London time, the probability that the Bank will hold rates steady at 5.25% had risen from 20% to almost 55%, according to LSEG swaps data.

Notably, core CPI — which excludes volatile food, energy, alcohol and tobacco prices — came in at 6.2% in the 12 months to the end of August, down from 6.9% in July.

This is a breaking news story and will be updated shortly.

Original news source Credit: www.cnbc.com

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