The British central bank has recently raised interest rates significantly.
(Photo: Reuters)
London In view of the high inflation, the British central bank is driving up the key interest rate massively. On Thursday, she raised it by half a percentage point to 1.75 percent – and thus more strongly than at any time since the Bank of England (BoE) gained independence from politics in 1997.
Financial markets were prepared for the BoE to follow the lead of the European Central Bank (ECB). This recently initiated its turnaround in interest rates with such a large step. Although the monetary watchdogs in London completed their monetary policy turnaround in December 2021, they have so far only taken small steps. Now they decided with a clear majority of 8:1 votes in the monetary policy committee for a strong hike.
They were now under pressure. Fueled by skyrocketing energy costs and supply chain problems, consumer prices on the island had recently soared 9.4 percent – a 40-year high. According to experts, the surge in inflation in the United Kingdom is likely to last longer than in many other economies. The country’s exit from the European Union also plays a role, which affects trade, among other things.
Higher interest rates are intended to prevent the rise in inflation from taking root in the economy and thus causing wages and prices to continue to escalate. Due to persistently high inflation in the United States, the US Federal Reserve has recently raised the key interest rate by 0.75 percentage points twice in a row.
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