2023-08-03 12:10:07
The Bank of England raised rates by 0.25 percentage point on Thursday, to a high since early 2008 at 5.25%, to fight inflation which it expects to be more persistent, despite its decline in recent months .
“Certain crucial indicators, including wage increases, suggest that more persistent inflationary pressures are materializing. The (Monetary Policy, or MPC) Committee decided at this meeting to raise rates” for the 14th consecutive time, justifies the central bank in the minutes of its meeting.
The Bank of England opts for an increase of the same magnitude as those of the American Federal Reserve (Fed) and the European Central Bank (ECB) at the end of July, even if the British monetary authority revises slightly upwards its forecasts for longer-term inflation: at 2.5% in 2024 and 1.5% in 2025.
Inflation remains at 7.9% year on year in the UK in June, the highest among rich G7 countries despite a marked slowdown, fueling a cost of living crisis in the UK, according to the latest available data. .
“Inflation is receding and that’s good news. We know inflation hits the less wealthy most directly and we need to make sure it comes back to our 2% target,” BoE boss Andrew Bailey in a statement.
That shouldn’t push the UK into recession, BoE says, but the central bank now expects sluggish growth of 0.5% in 2024 and 0.25% in 2025, worse than its already gloomy projections. May (at 0.75% in 2024 and 0.75% in 2025).
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