The Bank of England is set to raise interest rates again
(PA Wire)
The Bank of England is expected to raise interest rates for the 11th time in a row, after yesterday’s shock rise in inflation.
It is due to announce its decision at noon, with economists and financial markets predicting that the BoE’s Monetary Policy Committee will lift interest rates to a quarter of one per cent, to 4.25 per cent.
Any rate rise would be consistent with the BoE’s plan to battle inflation, but would have a detrimental impact on borrowers and those on tracker mortgage deals.
It comes just a day after the surprise jump in Consumer Prices Index inflation, from 10.1 per cent in January to 10.4 per cent in February.
Craig Erlam, a senior market analyst for Oanda, said the inflation figures came as a “crushing blow” for the BoE.
He said: “Whatever flexibility the Bank of England may have thought it would have on Thursday was wiped out by Wednesday morning’s inflation data and once more, the topic of conversation has shifted to whether 0.25 percentage points will be enough.”
Bank rates decision in shadow of Fed
The Bank of England will look to the United States in making a decision on whether to raise interest rates.
Washington’s Federal Reserve yesterday voted to increase the base rate by 0.25 percentage points, up to a 16-year high range of 4.75 per cent to 5 per cent.
The increase was smaller than had been expected before the banking crisis of recent weeks, which has been blamed in part on higher rates encouraging businesses to draw out their savings rather than relying on more expensive borrowing.
Liam James23 March 2023 10:04
City chiefs join forces in plan for future of UK finance amid global banking troubles
Leaders from financial service giants will join forces in a plan to secure the future of UK finance sector.
It comes as the nation awaits the Bank of England’s latest interest rate decision which is expected to rise for the 11th time in a row following yesterday’s shock rise in inflation and weeks of banking troubles.
The plan, involving Lloyd’s, JP Morgan and Barclays, among others, will identify areas of risk in the UK finance sector as well as secure innovation for sustainable finance, the City of London Corporation confirmed.
Katharine Braddick, Group Head of Strategic Policy, Barclays, said: “Recent geopolitical shocks and the shared challenge of climate change remind us that the world’s economies are interconnected. The UK can play a leading role here, in setting international standards.”
Joe Middleton23 March 2023 08:56
BoE raising rates today will cause ‘more damage’, says mortgage expert
Stuart Gregory, managing director of Lentune Mortgage Consultancy, has tweeted that the BoE raising rates today will cause “more damage”.
He said: Real truth is that Bank of England raising interest rates tomorrow will cause more damage.
“Millions of borrowers are looking at double or triple their current mortgage outgoings this year as their low rates end. No-one wins – as Landlords will need to pass this on as well.”
Joe Middleton23 March 2023 08:42
Investec Economics predicts BoE will opt for ‘wait-and-see approach’
Investec Economics predicts the BoE will opt for a “wait-and-see approach” and keep rates at 4% while it assesses the situation.
Economist Ellie Henderson said: “The MPC will have to assess which is the lesser of two evils: the risk of inflation being higher for longer or the current threat to financial stability stemming from the rapidly evolving fears of a banking crisis.”
Joe Middleton23 March 2023 08:25
Bank may have to act on interest rates as inflation kicks the poorest hardest
With food prices surging at 18 per cent, the MPC simply can’t afford not to act, writes James Moore.
Joe Middleton23 March 2023 08:14
Bank of England is expected to increase interest rates for 11th time in a row
The Bank of England is expected to increase interest rates for the 11th time in a row today after an unexpected resurgence in UK inflation.
Economists are pencilling in a rise to 4.25% from 4%, with the case for an increase strengthened by official figures on Wednesday revealing a surprise jump in inflation to 10.4% last month.
The noon decision also comes after the US Federal Reserve raised its key overnight interest rate by a quarter of a percentage point, despite recent turbulence in financial markets amid fears of a banking crisis.
But the Bank of England faces a difficult balancing act, weighing up the need to rein in inflation with the worries over banking woes and the possibility they may start to clamp down on lending.
Joe Middleton23 March 2023 08:10
