Bank of England postpones interest rate decision for next week after Queen’s death

A widely expected interest rate hike has been put on hold due to the Queen’s death, the Bank of England has said.

The Bank said decision makers on its monetary policy committee will not meet as scheduled next week.

Instead, the meeting, at which committee members were expected to raise rates again, will take place the following week, the bank said.

“Given the current period of national mourning in the UK, the September 2022 meeting of the Monetary Policy Committee has been postponed for a week,” he said.

Queen Elizabeth II visits the gold vault during her visit to the Bank of England in 2012 (Eddie Mulholland/Daily Telegraph/PA) (PA wire)

The new pricing decision will instead be announced on September 22.

This follows decisions by several public bodies to change their plans for the coming week.

The Office for National Statistics canceled the release of all data on Friday, while the Met Office said it would only release daily forecasts and warnings during the 10-day mourning period.

The Bank was widely expected to raise rates at the next meeting, the latest in a series of hikes.

Deutsche Bank analysts had said rates were likely to rise 0.5 percentage points to 2.25%, their highest level since December 2008.

Although the first-order impact of Trussonomics is to reduce inflation over the next 12 months, the sheer magnitude of the stimulus measures should increase inflation over the medium term.

Others at BNP Paribas said “there are undoubtedly compelling reasons to up the ante” and raise rates to 2.5% at the next meeting.

They said while energy bills may have been capped, broader inflation still remains elevated for households and businesses.

“Although the first-order impact of ‘Trusonomics’ will be to reduce inflation over the next 12 months, the sheer magnitude of the stimulus is likely to add to inflation over the medium term, pointing to a terminal rate higher than what the MPC had previously priced in,” BNP Paribas said.

Analysts added: “The MPC could also feel a sense of political pressure. While Truss and new Chancellor Kwasi Kwarteng have reaffirmed the MPC’s independence, a review of its mandate – to which Governor Andrew Bailey was open – seems likely sooner rather than later.

“To be clear, we don’t think the MPC will be unduly influenced by politics, but with inflation so high to start with, the optics of underdelivery are different in the current environment.”

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Stephen V. Lee