Bank of England poised to hike rates for first time in three years
LONDON: The Bank of England (BoE) is widely expected to raise interest rates for the first time in three years on Thursday due to mounting inflation pressures from the US-Iran war, taking a path already embarked on by all its main peers.
The Bank of England is expected to raise interest rates for the first time in three years on Thursday, according to economists. This decision comes due to mounting inflation pressures resulting from the ongoing US-Iran war. The Monetary Policy Committee (MPC) is expected to vote 7-2 to increase the Bank Rate from 3.75% to 4%, with the last increase occurring in August 2023.
Hetal Mehta, chief economist at wealth managers St James's Place, believes the MPC will push through with the hike. Factors such as a recent pickup in energy prices and resilient economic growth have tipped the balance in favor of the rate increase. The longer the US-Iran conflict persists, the higher the chance the price increases will spread throughout the British economy.
Inflation in September surpassed economists' expectations, reaching 3.5%, compared to the BoE's target of 2%. The British economy has also shown greater resilience than initially anticipated, with GDP showing the biggest annual rise since 2022 and the joint-fastest expansion in the Group of Seven. However, there have been few indications of significant second-round effects of inflation on wage deals, with businesses expecting annual wage settlements of around 3.5% for next year.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
