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Controversial interest rate move: Bank of England raises interest rate to 3.5 percent


The bank in England wants to fight inflation with a further rate hike, the key interest rate will rise by 0.5 percentage points. Not all monetary watchdogs think this is wise – but further rate hikes could follow.

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Bank of England in London (picture from 2017)

Photo: Clodagh Kilcoyne / REUTERS

The British central bank is bracing itself against the high inflation with another interest rate hike.

The Bank of England announced interest rate increases of 0.5 percentage points to 3.5 percent after its interest rate meeting in London.

Bank economists had largely expected this decision.

It is the ninth rate hike since the end of last year, when the base rate was just above zero.

Like other central banks, however, the Bank of England is increasingly finding itself in a dilemma: On the one hand, it wants to use its tighter monetary policy to combat the high inflation rate of 10.7 percent recently.

On the other hand, the British economy is going through tough times because of the Ukraine war.

The central bank must therefore be careful not to overtax the economy with its tightening course.

The current interest rate decision was controversial internally: the decision to increase by 50 basis points was approved by six to three votes, as Reuters reports.

At the same time, the currency watchdogs declared that further increases might be necessary in the fight against inflation.

The monetary watchdogs in London are following the US Federal Reserve with their interest rate hike, which also took a step of half a percentage point on Wednesday and thus also slowed down its pace.


Source: spiegel

All business articles on 2022-12-15

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