The Bank of England is expected to raise interest rates to their highest level since late 2008 later Thursday, as it battles stubbornly high inflation in the UK.
Financial markets anticipate that the bank’s nine-member Monetary Policy Committee will raise its main interest rate by a quarter percentage point to 4.5%, the 12th consecutive hike.
Other major central banks, such as the United States Federal Reserve and the European Central Bank. Which have been steadily hiking interest rates in order to bring inflation rates down from multi-decade highs.
The Bank of England began raising interest rates from a low of 0.1% in late 2021. In order to keep a lid on price rises that were initially fueled by bottlenecks. Which is caused by the lifting of coronavirus lockdown restrictions and then by Russia’s invasion of Ukraine. That caused energy prices to skyrocket.
The bank will release quarterly economic projections for the stagnant UK economy along with its interest rates announcement. With annual inflation currently running at a higher-than-expected 10.1%. Economists will be curious to learn how quickly the bank expects inflation to return to its target of 2%. If it believes inflation will decline fast in the coming months. It will be less inclined to hike interest rates further.
“While a hike this week appears to be a done deal. The outlook for subsequent hikes remains uncertain,” said Kallum Pickering, senior economist at Berenberg Bank.
Those trying to jump on the property ladder or take out loans will be hoping that the expected increase on Thursday is the last of the current cycle.