Bank of England Rate Hike: Bank of England has once again made the loan costlier. The Bank of England has increased interest rates by a quarter percent or 25 basis points to 4.5 percent, which is the highest level of interest rates in Britain since 2008.
This is the 12th consecutive time when the Bank of England has decided to increase the interest rates after the rise in the inflation rate. The nine-member Monetary Policy Committee of the bank has taken this decision to increase the interest rates. The huge jump in inflation remains a big challenge for the UK.
However, it is a matter of relief that the Bank of England is no longer talking about recession. In February, he predicted an increase in the growth rate of the economy. After 1997, the biggest increase in the estimate of the growth rate has been seen. The Central Bank believes that due to high prices of food items, the fall in inflation rate will be less than its expectations. Earlier, many economists believed that the Bank of England would not increase interest rates any further, but their predictions proved wrong.
The Bank of England expects the inflation rate to be 5.1 per cent by the end of this year. The Bank of England believes that the target of 2 per cent can be reached only by 2025. This decision to increase interest rates has come when the ruling party of British Prime Minister Rishi Sunak has suffered a setback in the local elections. Voters were disenchanted with rising costs of living and government efforts to partially subsidize electricity bills.
Only last week, both the Federal Reserve of America and the European Central Bank have increased interest rates by 25 basis points. Although Fed President Jerome Powell has indicated that interest rates will not increase from here.
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