The Bank of England raised its key rate by a quarter of a percentage point for the first time in a decade in order to curb high inflation lifted by the Brexit vote. The bank said that it had lifted its benchmark rate, which affects the cost of loans and savings rates in the wider economy, to 0.50 per cent from the record low of 0.25 per cent. Monetary policy continues to provide significant support to jobs and activity in the current exceptional circumstances. The BOE indicated that any future increases in interest rates will be at a gradual pace and to a limited extent.

In the meantime, the eurozone economy expanded at a faster-than-expected pace in the third quarter while inflation slowed unexpectedly in October. Year-on-year, gross domestic product (GDP) in the eurozone grew by 2.5 per cent, better than the 2.3 per cent growth recorded in the second quarter and exceeding forecasts of 2.4 per cent. Meanwhile, eurozone inflation slowed to 1.4 per cent in October, while the rate was forecast to remain unchanged at 1.5 per cent. Core inflation, that excludes energy, food, alcohol and tobacco, slowed to 0.9 per cent from 1.1 per cent in September.

Finally, in the US, US President Donald Trump has selected Federal Reserve board member Jerome Powell as the next chairman of the nation’s central bank, succeeding Janet Yellen. Mr Powell has supported Ms Yellen’s general direction in setting monetary policy and in recent years has shared her concerns that low inflation justified continuing with a cautious approach to raising interest rates. Mr Powell, who has been a Federal Reserve board governor since 2012, played a key role in drafting new bank regulations after the crisis and will likely offer more continuity for Wall Street than other candidates, analysts said.

This report was compiled by Bank of Valletta for general information purposes only.