The decision was made in line with the concern of monetary policy makers about the slow rate of decline in inflation, which at the March cut-off was 10.1%, only seven tenths below the February data.
He Bank of England (BoE) raised the interest rate by 25 basis points this Thursday, from 4.25% to 4.5%, in a crusade to combat the inflationary spiral in the United Kingdom. This is the highest data since 2008, reported the Bank of England.
The decision was made in line with the concern of monetary policy makers about the slow rate of decline in inflationwhich at the March cutoff was 10.1%, only seven tenths below the February data.
The Bank of England estimates that inflation in the island territory will fall to 5.1% towards the fourth quarter of 2023, so that this year a recession would be ruled out, and it would only return to the target of 2% next year 2024.
What are the next steps for the Bank of England?
Market analysts are opting for a new interest rate increase at the next BoE meeting in June, as the agency left the door open “if conditions persist.”
“The Monetary Policy Committee (MPC) refrained from clearly stating that the interest rate hike this Thursday will be the last for this year, but the language in the minutes continues to suggest that it will rise again only if evidence of inflationary pressures emerges. more persistent than anticipated in their forecasts,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
Meanwhile, James Smith, Developed Markets economist at ING Research, argues that the most interesting question now is “when will rates finally be cut”.
“Our view is that it is unlikely to be this year, partly because the job market is proving resilient. The Bank has softened its expected increase in the unemployment rate and, with it, raised its predictions for wage growth. But equally, the inflation story is starting to look better,” Smith said.