The Bank of England raised its key interest rate again by 50 basis points

The Monetary Policy Committee of the Bank of England decided todaythe re-increase of its key interest rate by 50 basis points. Thus, the benchmark interest rate rose from 3% to 3.5%.

This is the ninth consecutive increase in the key interest rate since December 2021, which was already at a 14-year high.

At the November meeting, the Monetary Policy Committee had proceeded with an “aggressive” move, as it was described at the time, by increasing the interest rate by 75 points. This was also the biggest increase in one session since 1989.

The Commission’s aim is to bring inflation down to 2% from the current 10.7%. That is why analysts estimate that there will be further increases in the base interest rate from the new year. Some note that it could reach or even exceed 4.5% by 2023.

The Bank of England’s rate hike is also raising many mortgage payments and therefore the cost of living for an estimated four million households.

The UK economy, the sixth largest in the world, has long been in the throes of a cyclone. It is typical that just two days ago the finance minister Jeremy Hunt had emphasized, among other things, that things will get worse before they get better. According to the country’s National Statistics Service, between August and October the British economy shrank by 0.3%. During this period, economic activity in the UK slowed in all major sectors, including manufacturing, construction and services.

It is worth noting that the Bank of England’s Monetary Policy Committee meets eight times a year to decide on interest rate policy.

RES-EMP

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