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Bank of England raises rates, but sterling slides

As expected the Bank of England hiked rates for the first time since 2007 by a majority of 7-2, which was more or less what markets had been expecting, with David Ramsden and Jon Cunliffe voting against.

The pound and gilt yields slid sharply on the back of the removal of the line that interest rates may have to rise faster than markets currently expect. The removal of this line suggests that any further hikes are likely to come much further out into 2018. This is about as much as a dovish hike as you can get . It’s now on to the inflation report to put some flesh on the bones

The bank sees inflation at 2.4% in 2018 and 2.2% in 2019, while cutting its unemployment forecast.

The bank also sees GDP rising 1.6% in 2018 and 1.7% in 2019 and 2020.

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