No surprises on interest rates yesterday from the ECB or Bank of England

Home » Foreign Currency News » No surprises on interest rates yesterday from the ECB or Bank of England

After the big build up, there were no real surprises from two central banks yesterday. First up, in London, the Bank of England who ignored mounting inflation pressures and kept interest rates at 0.5% for the 25th consecutive month, whilst maintaining quantitative easing at £200 billion. The breakdown of the voting will be keenly awaited on 20th April and could be Sterling positive if another member of the monetary policy committee voted in favour of a rate hike.

Following the Bank of England 45 minutes later was the European Central Bank who raised interest rates for the first time in nearly 3 years to 1.25%. The rise by 0.25% seems to have left the door open for further interest rate increases, potentially as early as June. In the accompanying press conference the use of "monitor very closely" suggests there will be another interest rate hike in potentially two months time.

The reaction to the news was fairly muted; Sterling initially lost half a cent against the Euro before recovering and opening today at the same level as yesterday just below £/€ 1.14. Elsewhere the Euro lost out, falling 0.2% against the US Dollar to €/$ 1.43.

Today EU finance ministers and central bankers are meeting in Budapest to discuss Portugal and the specific details of a forthcoming aid package that could reportedly be up to €85 billion. 

Today's economic calendar brings German February trade figures, Bank of France March business sentiment, UK March producer prices, and US February wholesale inventories. Have a good weekend.