The Bank of England said on Thursday it would move to a "more British style of regulation" for the country's huge financial services industry as it seeks to take advantage of Brexit.
Britain's surging inflation could slow if new Prime Minister Liz Truss helps households and businesses cope with rocketing energy costs, but it is too soon to say what that will mean for interest rates, the BoE's chief economist said.
British businesses have increasingly high expectations for inflation and wage costs over the coming year, according to a Bank of England survey which is likely to boost policymakers' concerns that it will be hard to get inflation back to target.
British government bonds are on course for their biggest monthly fall since 1994, as surging energy prices create a perfect storm of higher inflation, tighter monetary policy and the prospect of greater government borrowing.
British two-year government bond yields surged on Wednesday to their highest level since the depths of the global financial crisis almost 14 years ago as stronger-than-expected inflation data fuelled bets on further Bank of England interest rate hikes.
The Bank of England will deliver another bumper 50 basis points (bps) increase to borrowing costs next month but then slow the pace to a more regular 25 basis point rise in November before pausing, a Reuters poll forecast.
The Bank of England would press on with plans to gradually sell its vast stock of British government bonds even if an economic slowdown eventually forces it to cut interest rates, Deputy Governor Dave Ramsden said.
The Bank of England will probably have to raise interest rates further from their current 14 year-high to tackle inflation pressures that are gaining a foothold in Britain's economy.
Bank of England Governor Andrew Bailey pushed back at suggestions by the front-runner to become Britain's next prime minister Liz Truss and her supporters that the government should have a bigger role in how the central bank operates.
The Bank of England raised interest rates by the most in 27 years on Thursday in an attempt to smother surging inflation on track to top 13%, even as it warned a long recession is coming.
The Bank of England's top brass defended their record on Britain's monetary policy on Thursday, after a cabinet minister talked openly about diluting the central bank's operational independence.
Strong earnings at Credit Agricole and Lufthansa lifted stocks on Thursday as tension over Nancy Pelosi's visit to Taiwan eased and markets bet the Bank of England will hike interest rates by the largest amount since 1995 to quell inflation.
The Bank of England is expected to raise interest rates by the most since 1995 on Thursday, even as the risks of a recession mount, in an attempt to stop a surge in inflation from becoming embedded in Britain's economy.
The Bank of England is now expected to lift borrowing costs by a bigger 50 basis points to 1.75% on Thursday as it battles soaring inflation, according to a Reuters poll taken over the past week after several economists changed their minds.
The Bank of England must decide next week whether to join the ranks of central banks rushing out their biggest interest rate hikes in decades, or whether the warning signs of a recession mean it should tread more cautiously.
Surging petrol and food prices last month pushed British inflation to its highest rate in 40 years, according to official figures that bolstered the chances of a rare half percentage-point Bank of England interest rate hike next month.
A top Bank of England official pushed back on Monday at suggestions from a leading candidate to become Britain's next prime minister that the government should set a "clear direction of travel" for monetary policy.
Britain's biggest domestic lender Lloyds Banking Group contacted 2 million of its 26 million customers in May after identifying they could need extra support to cope with soaring food and energy prices and rising debt costs.
Bank of England Governor Andrew Bailey said on Monday that he still thought that inflation was likely to fall sharply next year, broadly in line with forecasts the British central bank presented in early May.
Bank of England chief economist Huw Pill warned on Wednesday that Britain's economy would slow to a crawl over the next 12 months and repeated his preference for a "steady-handed" approach to raising interest rates.
Britain racked up a record shortfall in its current account in early 2022, in part due to the soaring cost of its fuel imports, according to data that officials cautioned could be revised.
British finance minister Rishi Sunak has toughened his language towards Bank of England Governor Andrew Bailey, a reflection of the political pressure piling on them both as inflation surges towards double digits.
