Bank of England under pressure to raise interest rates or risk ‘losing credibility’
The Bank of England is facing mounting pressure to raise interest rates on Thursday amid a global bond market rout fuelled by concerns over runaway government borrowing and sticky inflation. Investors told Threadneedle Street it was “essential” to rein in prices before the energy shock triggered by the Iran war spreads through the economy and [...]
The Bank of England is under pressure to raise interest rates on Thursday due to a global bond market rout driven by concerns over excessive government borrowing and stubborn inflation. Investors have emphasized the "essential" need to curb prices before the energy shock from the Iran war spreads through the economy, warning that not doing so could compromise the Bank's "credibility."
The yield on America's 10-year Treasury, the benchmark for global debt markets, has surged above five percent for the first time since 2007, indicating persistent investor unease about long-term inflation trends. However, the UK's sovereign debt, issued as bonds known as gilts, has been sold off more aggressively than any other major economy, with yields nearing six percent on some securities.
Senior UK economist Andrew Wishart from Berenberg warns that the Bank must "deliver" on its previous promises to raise interest rates to avoid "losing credibility" and sparking a sell-off in the pound. Some argue that the Monetary Policy Committee should hold off on raising rates despite market volatility, as evidence for lingering inflationary pressures remains limited.
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