In the Asian session on Monday (May 15), GBP/USD fell to 1.2448, a drop of 0.00%. The Bank of England raised interest rates by 25 basis points to 4.5% as scheduled, the highest interest rate level since October 2008, and said that the persistence of inflation will require further tightening of monetary policy.
The Bank of England also sharply raised its economic growth forecast, which is expected to grow by 0.25% in 2023, which was previously expected to shrink by 0.5%. The growth forecast for 2024 was raised from a contraction of 0.25% to an increase of 0.75%. The Bank of England, which is supposed to keep rates at 4.5%, could do more damage to the economy than is needed to bring inflation down to target if it raises rates before the tightening effects are felt.
