London The Bank of England (BoE) is continuing to hike interest rates as it fights the island’s stubbornly high inflation. The central bank of London raised the key monetary policy rate by a quarter point to 4.25 percent on Thursday. Economists interviewed by the Reuters news agency had expected it.
It was the eleventh increase in a row. However, given the recent turbulence in the global financial sector, the decision to continue the series was controversial internally: the proponents prevailed by a vote of seven to two.
With its rate hike, the BoE followed in the footsteps of the US Federal Reserve. This had also raised the key interest rate by a quarter of a percentage point the previous day – to the new range of 4.75 to 5.0 percent.
The London currency watchdog around BoE chief Andrew Bailey was under pressure because the inflation rate recently rose surprisingly: At 10.4 percent, it is well above the currency watchdog’s target of 2.0 percent. The economic prospects are not rosy either. Many experts are assuming that Great Britain will soon be forced into a recession.
The independent budget authority (OBR) expects economic output to shrink by 0.2 percent this year. Treasury Secretary Jeremy Hunt recently announced that he intends to present plans to strengthen the financial sector, which plays a key role in London, in the autumn.
It is about measures to promote investments and make the London Stock Exchange LSE more attractive. The bankruptcy of the US bank SVB also had an impact on Great Britain. In order to limit distortions, the British SVB subsidiary was hastily bought by the major bank HSBC.
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