The Bank of England raised interest rates by 0.5% in the biggest increase since 2008 as it forecast a 0.1% fall in GDP in the current quarter, suggesting the UK is already in recession. The Bank’s base rate is now 2.25 per cent – up from 1.75 per cent when the rate was last raised in August. It is the seventh straight time the key interest rate has been raised and further hikes are expected later in the year, with some analysts predicting a high of 3 percent by the end of the year. The decision to raise interest rates is an attempt by the Bank to bid to tackle inflation – or rising prices. The Bank, which is independent from the government, aims to keep inflation below 2%. However, inflation, fueled by Russia’s war in Ukraine and rising energy costs, is currently at 9.9% and is expected to rise further.
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Three members of the Bank’s committee voted for a larger increase of 0.75%.
Five members of the Bank of England’s monetary policy committee voted to raise its key interest rate from 1.75% to 2.25%, while three voted in favor of a sharper increase to 2.5%, the Bank said. It said uncertainty over the outlook for energy prices had eased after the government announced it would cap bills at £2,500 for the average household over two years. The committee also voted unanimously to reduce quantitative easing by £80bn over the next 12 months to £758bn. Matt Mathers September 22, 2022 12:18 p.m 1663844880
The Bank expects GDP to fall by 0.1 in the current quarter
The Bank of England said it now expects GDP to fall by 0.1% in the current quarter, indicating the country is already in recession. Matt Mathers September 22, 2022 12:08 p.m 1663844787
Bank rate increase by 0.5%.
The Bank of England raised interest rates by 0.5% in the biggest increase since 2008. The Bank’s base rate is now 2.25 per cent – up from 1.75 per cent when the rate was last raised in August. It is the seventh straight time the key interest rate has been raised and further hikes are expected later in the year, with some analysts predicting a high of 3 percent by the end of the year. My colleague Thomas Kingsley has more on this story below:
Interest rates rise 0.5% as Bank of England says UK ‘already in recession’
The UK interest rate is now the highest level since the 2008 financial crisis Matt Mathers September 22, 2022 12:06 p.m 1663844290
Crypto market crashes to annual lows after interest rate hike
Bitcoin and the broader cryptocurrency market have retreated near annual lows on Thursday following a move by the US Federal Reserve to raise interest rates to the highest level in nearly 15 years. The rate hike was widely expected, meaning the cryptocurrency market downturn was not as bad as some analysts had feared, although the Bank of England is also expected to raise interest rates on Thursday. Anthony Cuthbertson reports:
Crypto market crashes to annual lows after interest rate hike
Crypto Market Loses Nearly $100 Billion in Value in Last Seven Days Despite Ethereum Merge Success Matt Mathers September 22, 2022 11:58 am 1663843967
A former member of the Bank’s committee expects a 0.75% increase.
A former member of the Bank’s monetary policy committee expects a rate hike of 0.75%. Sir John Gieve, who helped set interest rates between 2006 and 2009, spoke to the BBC earlier. “I expect interest rates to continue to rise in future meetings, and I think markets generally expect rates to rise to above 3 percent by the end of this year,” he said. Matt Mathers September 22, 2022 11:52 am 1663837836
Borrowers told to ‘buckle’ ahead of expected rate hike
A broker has warned borrowers to “bend” ahead of an expected rise in Bank rates. Lewis Shaw, of broker Shaw Financial Services, said: “Borrowers will have to buckle down. “The writing is on the wall for a significant rise in bank rates and lenders have preemptively raised rates because they don’t want to be caught scrambling to reprice their deals.” Matt Mathers September 22, 2022 10:10 am 1663835894
The Federal Reserve raises interest rates by 0.75% in the latest move to curb inflation
The UK is not the only country raising interest rates in a bid to curb soaring inflation, fueled by Vladimir Putin’s war in Ukraine. The Federal Reserve – the US central bank, similar to the Bank of England – raised interest rates by 0.75 percent for the third consecutive month. The increase puts short-term interest rates at their highest levels since before the 2008 financial crisis. My colleague Andrew Feinberg reports:
The Federal Reserve raises interest rates by 0.75% in the latest move to curb inflation
Interest rates this high would make it harder for Americans to borrow money and harder for banks to lend Matt Mathers 22 September 2022 09:38 1663834646
What do economists say about rising interest rates?
“Investors believe the most likely outcome is that the MPC will raise the Bank rate by 75 basis points (0.75 percentage points) on Thursday,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics. But he said economists expected a smaller rise, to 2.5 per cent – the same 0.5 percentage point change as the Bank’s last hike. “For starters, hawkish surprises from the MPC have been much less frequent than dovish over the last year,” he said. “Furthermore, Governor Bailey has openly hinted at a 50bp hike ahead of the August meeting, but has not given markets a push for a 75bp rate hike. “We believe the MPC still sees a 50 basis point increase as consistent with its commitment to act ‘strongly’ if it sees signs of more persistent inflationary pressures.” ING economist James Smith said the Bank of England should react to recent falls in the pound. Sterling hit a new 37-year low against the dollar on Friday. “The Bank of England meeting is crucial,” he said. “It will tell us not only how worried policymakers are about sterling falling in other UK markets, but also how the government’s decision to cap energy prices for households/businesses will translate into monetary policy.” “We favor a 50bp hike on Thursday, taking Bank Rate to 2.25 per cent, although 75bp is clearly on the table and we would expect at least two policymakers to vote for it.” He said interest rates would likely rise again in November and December, reaching 3% by the end of the year. Matt Mathers22 September 2022 09:17 1663834059
BoE to raise interest rates
The Bank of England was due to make an announcement earlier in the month, but this was postponed due to the Queen’s death. Its monetary policy committee was scheduled to meet yesterday to finalize the announcement, which is expected around noon. Markets believe the Bank will unveil its biggest rate hike in three decades.
The Bank of England is preparing to raise interest rates
The Monetary Policy Committee (MPC) is expected to raise interest rates by 0.75 percentage points to 2.5%, according to financial markets. Matt Mathers22 September 2022 09:07 1663833506
What are interest rates and why do they rise?
The interest rate is a measure that tells you how high the cost of borrowing money is, or how high the rewards of saving are. If you borrow money, usually from a bank, the interest rate on that money is the amount you will be charged for borrowing it. It is a charge on top of the total loan amount and will appear as a percentage of the total amount. My colleague Holly Bancroft has more:
Everything you need to know about interest rates and how they affect you
Borrowing costs are already at their highest level in 13 years Matt Mathers22 September 2022 08:58
