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

The Bank said that decision makers on its Monetary Policy Committee would not meet as scheduled next week.

Instead the meeting, at which committee members were expected to hike rates again, will take place the following week, the Bank said

“In light of the period of national mourning now being observed in the United Kingdom, the September 2022 meeting of the Monetary Policy Committee has been postponed for a period of one week,” it said.

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

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

The Office for National Statistics cancelled the publication of all data on Friday, while the Met Office has said it will only be posting daily forecasts and warnings during the 10-day mourning period.

The Bank had widely been expected to hike rates at the next meeting, the latest in a series of increases.

Analysts at Deutsche Bank had said that rates were likely to increase by 0.5 percentage points to 2.25% – its highest since December 2008.

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

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

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

The analysts added: “The MPC might feel a sense of political pressure too. While Truss and new Chancellor Kwasi Kwarteng have re-affirmed the MPC’s independence, a review of its mandate – to which Governor Andrew Bailey was open – looks likely sooner rather than later.

“To be clear, we do not think the MPC will be unduly influenced by politics, but with inflation so high to begin with, the optics of under-delivery are different against the current backdrop.”

Earlier this week, the European Central Bank made its largest-ever interest rate increase, following the US Federal Reserve and other central banks in a global stampede of rapid rate hikes meant to dampen record inflation that is squeezing consumers and pushing Europe towards recession.

The bank’s 25-member governing council raised its key benchmarks by an unprecedented three-quarters of a percentage point for the 19 countries that use the euro currency.

The ECB usually moves rates by a quarter-point and has never raised its key bank lending rate by three-quarters of a point since the euro’s launch in 1999.

Bank president Christine Lagarde said the ECB would raise rates “over the next several meetings” because inflation was “likely to stay above our target for an extended period”. It enacted a half-point hike at its meeting in July, its first increase in 11 years.