Since the end of 2021, the BoE has raised interest rates six times with the increase on August 4 being the strongest.
The Bank of England (BoE) just raised interest rates by 0.5%, the highest increase since 1995, and warned the economy could fall into one of the longest recessions since the crisis. 2008 global financial crisis
This is the sixth time in a row that the BoE has raised interest rates, bringing the operating rate to 1.75%.
The Monetary Policy Committee (MPC) reached a high consensus on the decision to sharply increase interest rates this time with eight votes for and one against, in the context of continuously increasing inflation pressure in the UK and across Europe. Europe.
“The UK retail gas price almost doubled since May after Russia restricted gas supplies to the old continent is the basis for the BoE to take a bold step. MPC members are also concerned that gas supply may continue to be cut in the near future,” according to the statement after the meeting.
The BoE forecasts that inflation in the UK will peak at 13.3% in October 2022 and continue to stay high until 2023. Inflation may only return to the 2% target threshold in 2025.
The agency also announced a bleak outlook for the UK economy. The recent rise in gas prices has “dramatically worsened” not only the outlook for the UK economy but also Europe, the agency said.
MPC forecasts the UK will fall into recession from the fourth quarter of 2022. This recession will last 15 months amid a sharp decline in real household income in 2022 and 2023. Consumption also begins to show signs of decline.