UK Interest Rate Hits 14-Year Record
The Bank of England increased the policy rate by 50 basis points to 2.25 percent within the scope of the global inflation struggle. With the decision, the policy rate reached its highest level in 14 years.
UK Interest rate hits 14-year record. The Bank of England (BOE) decided to increase the policy rate by 50 basis points. With this decision, the interest rate was brought to 2.25 percent. While the decision was taken with 5 votes against 4, 3 members voted for a 75 basis point increase and 1 member voted for a 25 basis point increase. Interest rate hikes thus continued for the 7th month. The Bank had raised the policy rate by 50 basis points last month.
The Bank of England has been raising interest rates since December due to sharp increases in inflation. Bank officials lowered their inflation forecasts from 13 percent to below 11 percent. It was noted that a deep recession could be avoided with the energy support plan of the new Prime Minister Liz Truss. The committee stated that if inflationary pressures are ‘persistent’, it will react strongly as necessary.
The policy rate was widely expected to be raised by 50 basis points, but there were also expectations that the Fed could follow yesterday’s 75 basis point hike with a 75 basis point hike. Annual inflation in the country fell to 9.9 percent in August but was still well above the bank’s 2 percent target. The BOE expects inflation, which peaked in October, to remain in double digits for several more months.
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