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BoE Expected to Hike Interest Rate to Highest Level Since 1980s


The Bank of England, Britain’s central bank, is pictured in the City of London on November 2, 2022.
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Earlier, echoing forecasts made in September by Bank of England (BoE) governor, Andrew Bailey, a leading UK economic forecasting group, the EY ITEM Club, warned that high energy prices, inflation at a 40-year high of 10.1% in September, and rising interest rates indicated that the country was heading for recession until the middle of 2023.In an effort to tame soaring inflation, the Bank of England (BoE) is expected to raise interest rates by 0.75 percentage points, according to the country’s media outlets. The BoE’s eighth in succession hike would be the largest since 1989. It is set to push the base rate to 3%, after it stood at just 0.1% under a year ago. This figure is estimated to be the highest level since the global financial crisis in 2008. The Monetary Policy Committee’s nine members will unveil the fiscal policy decision on Thursday, with the BoE also releasing long-term inflation forecasts. British people are expected to be warned that the cost of living will be much higher than its target of 2%.The BoE’s forecasts are expected to say that “the economic outlook has deteriorated further”, analysts at Deutsche Bank were cited by publications as saying.”Conditioned on market pricing, the UK economy will likely fall into a deeper and more prolonged recession,” they added.WorldUK May Be in Recession, Says BoE as It Warns Support Package Risks ‘Adding to Inflationary Pressure’23 September, 05:51 GMTIn his recent speech, the bank of England Deputy Governor for Monetary Policy, Ben Broadbent, underscored that the Gross Domestic Product (GDP) would take a “pretty material” hit from the fiscal policy tightening moves. Earlier, the Bank’s growth forecasts pointed to a five-quarter recession for the country.The moves by the Bank of England follow similar interest rate hikes by America’s central bank. The Federal Reserve confirmed on November 2 that it will increase interest rates by 0.75 percentage points.“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,” the US bank said in its statement, adding it was “strongly committed to returning inflation to its 2% objective.”Weighing in on the anticipated monetary policy tightening decision by the Bank of England, the UK Labour party’s shadow chancellor, Rachel Reeves, is reportedly to warn of the detrimental impact on consumers and businesses.”Rising interest rates will mean families with already stretched budgets will be hit by higher mortgage payments. It will mean higher financing costs for businesses. And it will mean profound implications for growth as demand is sucked out of the economy,” Reeves is expected to say at the Anthropy conference in Cornwall.WorldDemonstrators Hit London’s Streets to Protest Against Energy Prices and Cost of Living Crisis1 October, 12:17 GMTThe soaring energy costs, inflation, rising interest rates are all signaling that the UK economy is expected to be in recession until the middle of 2023, a new EY ITEM Club Autumn Forecast revealed. The UK economic forecasting group predicted 0.3 percent contraction in GDP for next year.The disheartening forecasts come as more than a quarter of British people are increasingly resorting to their credit cards to buy food, and a fifth have relied on borrowed money this year amid rising prices, according to a recent Ipsos poll, while the Office for National Statistics revealed that 93 percent of adults across the country reported an increase in their cost of living in August-September 2022.

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