The Bank of England (BoE, for its acronym in English) joined the group of banks that increased their interest rates by raising it by a quarter of a point, to 1%, its highest level since 2009, with the aim of controlling the inflation that, according to their forecasts, will exceed 10% this year.
The nine BoE members who set rates voted six to three in favor of raising the interest rate from 0.75 percent. However, Catherine Mann, Jonathan Haskel and Michael Saunders called for a higher increase to 1.25 percent.
The BoE’s rate hike is the fourth since December, the fastest pace of monetary policy tightening in 25 years.
The entity said that most of its authorities believe that “a certain degree of additional tightening of monetary policy could be appropriate in the coming months.” Removed the word “modest” to describe the scale of upcoming increases.
The BoE said British inflation would peak later than in other advanced economies due to capping of household energy tariffs. Fuel bills soared 54% in April and the BoE forecast a further 40% increase in October, which will weigh on the economy.
Likewise, he pointed out that the impact of the new confinements due to Covid-19 in China is also worrying, which threatens to hit supply chains again and increase inflationary pressures.
on the eve
The Federal Reserve (Fed) this week increased its interest rate by 50 basis points, the largest increase in 22 years, and the markets were relieved that it did not opt for 75 basis points.
Still, the Fed said it was prepared for more half-point hikes and next month plans to cut its $9 trillion in assets accumulated during the pandemic to help control inflation there.
For its part, Norway’s central bank kept rates on hold yesterday after raising them a quarter point to 0.75% in March, when it announced plans to tighten monetary policy faster than expected.