Rising inflation to weaken Britain's economic activity; prompts BoE to stand pat: Angel Broking

Mr. Prathamesh Mallya (Chief Analyst- Non-Agri Commodities & Currencies, Angel Commodities Broking):

"Seven out of eight policymakers from Bank of England's Monetary Policy Committee voted to maintain the borrowing rates at 0.25 percent on 11th May'17 and left its debt purchases amounting to £435 billion unchanged. Since this was a highly expected move markets did not react initially. What caused the bearish swing in Sterling Pound were the statements made by the BoE governor who trimmed the growth forecast to 1.9 percent from 2 percent in 2017 and raised a red flag on surging inflation.

He warned Britons that the living standards would take a hit in 2017 given the Brexit woes that will push pound lower in turn boosting import prices, consumer prices along with meagre pay deals. Not alone this, markets expected another member i.e. Michael Saunders to join hands with Kristin Forbes in favour of rate hike which did not go as per plan. The BoE committee has ruled out any rate hike possibilities in the next couple of sessions given the weak growth trend and swelling consumer rates which has dented the market sentiments and is about to play with the price trend of Sterling Pound which is heavily dependent on sentiment at present."

Source : Equity Bulls

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