The Bank of England is raising interest rates again as UK inflation approaches 10%.
The Bank of England looks set to raise interest rates again as it tries to cope with the UK’s double-digit inflation rate.
After the US Federal Reserve announced its rise in interest rates, the big question for investors awaiting the announcement of the BoE’s June policy at 9pm on Thursday (AEST time) is magnitude of the increase.
Reuters reports that financial markets are fully appreciating a quarter-percentage point increase in the bank rate to 1.25 percent.
But investors have put a 50% chance of a half-point increase in the BoE, something it has not done since 1995.
The BoE has already increased lending costs four times since December, when it became the first major central bank in the world to raise rates after the COVID-19 pandemic.
Britain, more than many other rich nations, is facing a mix of high inflation and zero growth or recession.
Its economy is already showing signs of slowing down and will be the weakest among the world’s richest and richest countries next year, according to forecasts from the International Monetary Fund and the Organization for Economic Co-operation and Development.
But inflation, which reached a 40-year high of 9 percent in April, is projected to exceed 10 percent by the end of this year, more than five times the BoE’s 2 percent target. according to the latest central bank forecasts.