BREAKING: GBP plunges as BoE raise rates by 50 bps

The Bank of England announced a monetary policy decision at 12:00 pm GMT. Central bank raised its benchmark interest rate by 50bps to 3.50 % as widely expected. The Bank of England voted by a majority of 6-3 to raise interest rates by 50 bp to 3.5% during its December meeting, a smaller hike than last month, as policymakers try to contain inflation amid fears of a looming economic recession. Two members preferred to maintain Bank Rate at 3.0%, and one member preferred to increase Bank Rate by 75 bps, to 3.75%. The latest rate hike pushed the cost of borrowing to the highest level since late-2008.

Policymakers pointed out that further rate increases may be required. Labour market remains tight and inflation is expected to fall gradually in Q1 2023, on the other hand there has been evidence that could indicate greater persistence of inflation which justifies a further forceful monetary policy response.  Q4 GDP seen at -0.1% q/q (previously -0.3% in November) BOE will consider and decide the appropriate level of bank rate at each meeting.

GBPUSD pair fell after BoE decision however buyers attempt to regain control. Source: xStation5