Projects more raises until “sustained” inflation control of 2% is achieved
The Bank of England (BoE, in its acronym in English) decided to raise the key interest rate by 0.75%, to 3%, in a majority decision of its Monetary Committee. Two of the nine members voted to limit this rise in the cost of money, which is the strongest in three decades at 0.25% and 0.50%. The upward revision of the issuing bank in the UK follows the trend started the day before by the US Federal Reserve and earlier by the European Central Bank.
“If we don’t act vigorously now, it will get worse later,” BoE Governor Andres Bailey said at a news conference. For his part, Treasury Secretary Jeremy Hunt warned that his government’s priority is “to restore stability, restore public finances and reduce debt so that interest rate hikes are as light as possible”.
The BoE, which independently manages the government’s stated target of keeping inflation at 2%, took into account the fiscal correction imposed by the markets on the previous and short-lived conservative government of Liz Truss. But he did not estimate in this latest assessment any other forecasts or measures that Hunt could introduce in the budget plan, which will now be published on Nov. 19.
On the other hand, the Monetary Committee has updated the inflation outlook, which went from 10.1% in September to 11% in the current quarter, lower than preliminary figures in August. It maintains its recession forecast for 2023 and the first half of 2024, due to the impact of high energy prices and deteriorating financial conditions for consumers. The unemployment rate could exceed 6% in two years, a peak not seen in the previous recession.
The pound lost value against the dollar (-1.8%) and the euro (-1.2%) in response to the BoE decision. It was the eighth straight rise in the cash price and an increase that analysts took for granted. “There are no easy options,” said Minister Hunt, who took the reins after the financial storm in October.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
