Bank of England to raise interest rates for 13th time in a row this week to tame persistent inflation
- On June 22, 2023
- By GrowthInvest Marketing
The Bank of England is nailed on to raise interest rates for the thirteenth meeting in a row this Thursday, but markets think there’s an outside chance Governor Andrew Bailey and co will revert to an outsized rise to tame what is emerging as the worst inflation problem in the rich world.
Markets reckon the nine-strong monetary policy committee (MPC) – the group of people who set official interest rates in Britain – will kick borrowing costs up 25 basis points to 4.75 per cent, taking them to their highest level since April 2008.
However, some think there’s an outside chance the MPC will lift rates 50 basis points, something they have not done since February, in order to signal to markets they are serious about bringing inflation back to the two per cent target.
“A 50 basis points increase seems less likely, but is not out of the question,” analysts at consultancy Oxford Economics said in a note to clients last week. Traders think there is an about 20 per cent chance of such a rise happening.
A string of data of late has indicated UK inflation is proving much harder to tackle compared to the US and Europe.
Prices have increased 8.7 per cent over the last year to April, a smaller than expected drop from 10.1 per cent in March. In America and Europe, inflation has dropped to four per cent and 6.1 per cent respectively.
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