Bank of England sets up its own fintech hub

Oscar Cross
March 26, 2018

The Bank of England's Monetary Policy Committee (MPC) has voted by a majority of 7-2 to keep United Kingdom interest rates at the present level of 0.5 per cent.

"Our Monetary Policy Committee has voted by a majority of 7-2 to maintain Bank Rate at 0.50 percent", said a statement following a regular meeting.

Official data on Thursday showed that British retail sales rebounded in February from the previous month, boosted by growth in food and online purchases.

Burton Mills' economists stated that some members of the Monetary Policy Committee may be in favor of a rate hike as soon as this month but that the other members are expected to hold fire until May when Britain's economic outlook is revised.

Carney has said interest rate policy will depend heavily on Brexit talks progressing smoothly and not derailing confidence. However, lawmakers Ian McCafferty and Michael Saunders said economic conditions meant that time was ripe for rates to increase, prompting speculation that a rise will be on the cards in May this year.

The bank increased its base interest rate from 0.25% to 0.5% in November last year, having previously failed to raise rates in more than a decade as a response to the financial crisis.

The UK´s unemployment rate has meanwhile dipped, reverting to the lowest level since 1975, after a brief rise.

"We have set up a new fintech hub that will sit at the heart of the Bank, to consider both how the Bank understands and how it applies fintech, relevant to its mission", Ramsden said.


The UK central bank is not expected to adjust interest rates from their current 0.5% level, but the Pound could still advance if there are hints of an upcoming interest rate hike.

British Prime Minister Theresa May is in Brussels for a summit where the remaining 27 European Union members are expected, on Friday, to approve a post-Brexit transition period and adopt guidelines for talks on future relations including a trade deal.

A more hawkish path from the Fed is expected over the next couple of years after the Federal Open Markets Committee voted unanimously to raise the Federal Funds target range from 1.25%-1.5% to the 1.5%-1.75% band, in light of a strengthening economic outlook in recent months.

One bright spot: The panel noted that a squeeze on consumers from meager wage growth and high inflation triggered by a steep fall in the pound after 2016's Brexit vote appears to be fading.

Burton Mills' economists say that data indicating a recovery in salary growth is another indication that the BoE will likely increase interest rates in May.

Brettell also said a pick-up in wage growth "points to an erosion of slack in the labour market", and warned this "raises the prospect that a wage-price spiral could push inflation back up in future".

The only major South African data to watch out for next week will come at the end of weekly trading, when the trade balance for February is announced.

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