The Bank of England has halted its 14 consecutive interest rate hikes, keeping rates at 5.25% due to moderating inflation. Despite this, the economy remains precarious.
The Bank of England has decided to end a streak of 14 consecutive interest rate hikes, keeping them at 5.25%, following data showing a moderation in inflation. According to CNBC, the Monetary Policy Committee voted 5-4 in favor of not raising rates at its September meeting, while 4 members indicated they would have preferred a 0.25-point increase to 5.5%.
The Bank of England’s decision comes one day after the US Federal Reserve announced it would not raise interest rates, despite not achieving the desired inflation percentage.
England Has Been Increasing Interest Rates since Late 2021
England has been one of the countries hardest hit by inflation, leading the Bank to implement significant interest rate hikes since December 2021 in an effort to control or at least slow down inflation, which had reached a 15-year-high.
However, new data shows that the country’s monetary policy has had a positive effect, as the annual increase in the general consumer price index (an indicator used to measure the evolution of prices of goods and services consumed by families and therefore gauge the country’s inflation) dropped to 6.7%, well below the projected 7%.
Although the latest inflation data suggests relief from rate hikes, Bank of England Governor Andrew Bailey cautioned that inflation remains above the target, and they do not rule out further increases if necessary. For now, they will maintain high rates while continuing to work on curbing inflation.
“Our previous increases in interest rates are working, but let me be clear that inflation is still not where it needs to be, and there is absolutely no room for complacency. We’ll be watching closely to see if further increases are needed, and we will need to keep interest rates high enough for long enough to ensure that we get the job done,” said he.
Bank of England Faces Ongoing Inflation Challenges despite Rate Freeze
The Bank of England’s decision not to raise interest rates caused the British pound to fall, losing 0.7% against the dollar. However, this depreciation may be partly due to the strengthening of the dollar following the announcements by US Federal Reserve Chairman Jerome Powell that they would not raise interest rates in September.
Powell was clear in his presentation, indicating that despite the decrease in inflation, they have not yet achieved their goals, so they will maintain their aggressive stance throughout 2023, potentially making new rate increases before the end of the year.
Hussain Mehdi, a macro and investment strategist at HSBC Asset Management, has pointed out that despite the Bank of England’s decision not to raise rates and added that “the UK economy is already flirting with a recession.” The strategist has warned that there is a strong likelihood that major developed economies, including the United Kingdom, will enter a recession in 2024, given that current restrictive monetary conditions point to a slowdown.
Therefore, while the Bank of England’s pause in rate hikes is good news, the country’s economic situation remains fragile.
Market News, News
Marco is a passionate journalist with a deep addiction to cryptocurrencies and a keen interest in photography. He is fascinated by trading and market analysis. He has 5+ years of experience working with cryptocurrency projects.
Created with Sketch.
Subscribe to our telegram channel.
Join
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : CoinSpeaker – https://www.coinspeaker.com/bank-of-england-interest-rate-hike/
Winning the Sports Culture War Is Exciting, but It’s Driven by the Absurd