TODAY, the Bank of England will raise rates by 0.75 percent

TODAY, the Bank of England will raise rates by 0.75 percent


In an effort to combat runaway inflation, the Bank of England is expected to raise interest rates again today, causing extra suffering for the British people.

Bank of England governor Andrew Bailey has insisted it will act to rein in prices

Bank of England governor Andrew Bailey has insisted it will act to rein in prices


When the decision is revealed at noon, the base rate might climb by 0.75 percentage points to 2.5%, the most significant increase in thirty years.

Today would be the seventh consecutive month that the Bank has raised rates, although the level is still historically fairly low

Today would be the seventh consecutive month that the Bank has raised rates, although the level is still historically fairly low

The decision will impose hardship on mortgage-holders and increase the cost of borrowing for the government, just as Chancellor Kwasi Kwarteng prepares to spend hundreds of billions of pounds on electricity bills and tax cuts in tomorrow’s mini-Budget.

However, the Bank is becoming increasingly desperate to rein down inflation, which is nearly five above its objective at 9.9%.

The pressure on prices, caused by the conflict in Ukraine and Russia’s manipulation of gas supply, has been worsened by the weakening of the pound versus the US dollar, the worldwide trading currency for a large number of important resources.

After the Federal Reserve of the United States raised its own interest rate by 0.75 percentage points, the value of the pound fell to 1.12 against the dollar.

Sterling has dropped again overnight to barely 1.12 against the greenback after the Federal Reserve imposed its own 0.75 percentage point interest rate hike

Sterling has dropped again overnight to barely 1.12 against the greenback after the Federal Reserve imposed its own 0.75 percentage point interest rate hike

Higher central bank interest rates increase the market appeal of a currency.

Andrew Bailey, governor of the Bank of England, has asserted that the institution will act to curb inflation.

Today would mark the seventh consecutive month that the Bank has lifted interest rates, although the current level remains historically low.

After the Federal Reserve imposed its own 0.75 percentage point increase in interest rates, the value of the pound fell further overnight to only 1.12 US dollars.

The rise in living expenses has caused havoc on public finances. According to the Office of National Statistics, the interest bill on the UK’s £2.4trillion debt pile reached £8.2billion last month, the highest amount for August since records began in 1997.

The Institute for Fiscal Studies, a reputable research tank, has cautioned that Liz Truss’s pledge to increase spending on the energy bailout and tax cuts is ‘a risky bet on growth’

Today marks the sixth consecutive month in which the Bank has increased interest rates.

While increasing the base rate over its present level of 1.75 percent should help to manage inflation by promoting saving rather than spending, it also raises the cost of borrowing for everyone and dampens economic growth, which is already stagnant.

If interest rates increase by 0.75 percentage points, the monthly payment on a typical £250,000 mortgage will jump by £100.

The level of interest rates is still relatively low by historical standards, but since the credit crunch, Britons have become accustomed to them being close to zero.

The bank’s governor, Andrew Bailey, has promised that action will be taken to rein in prices, and a rate hike below that imposed by the Federal Reserve might cause further market instability.

The IFS estimated last night that the government’s spending plans might result in the United Kingdom borrowing £231 billion this year, which is more than twice the £99 billion forecast in March.

It will still be borrowing £100 billion annually by the middle of the 2020s, more than £60 billion more than previously anticipated, according to the think tank.

It was stated that higher growth could offset this, but it would be difficult to achieve. Carl Emmerson, deputy director of the IFS, stated, “While we would be able to enjoy lower taxes in the short term, the unsustainable growth of the national debt would eventually render this option untenable.”

Government officials have chosen to increase borrowing at a time when it is becoming more expensive to do so, in a gamble on growth that may not pay off.

“Achieving that magnitude of trend growth, while not impossible, would take either a large lot of good fortune over a lengthy period of time or a purposeful shift in policy direction.”

Ms. Truss has stated that a shift in strategy from her predecessors is required to stimulate Britain’s economic growth.

The interest bill on the United Kingdom’s £2.4 trillion debt reached £8.2 billion in August, the highest August total since records began in 1997.

She has committed to reduce taxes in an effort to make the United Kingdom more business-friendly.

Mr. Kwarteng stated yesterday, “I am committed to reducing debt in the medium term. However, in the case of a significant economic shock, it is imperative that the government intervene immediately to assist people and companies, just as it did during the pandemic.’

Three times in a row, the US central bank boosted interest rates last night. The Federal Reserve hiked interest rates by 0.75 percentage points, increasing the target interest rate range from 3% to 3.25%. It warned of “continuing rises” as it attempts to combat growing prices.

The action followed that of the European Central Bank, which this month boosted interest rates by 0.75 percentage points for the first time since the introduction of the euro in 1999.


↯↯↯Read More On The Topic On TDPel Media ↯↯↯

↯↯↯Read More On The Topic On Atomic Digest↯↯↯

Leave a Reply

Your email address will not be published.