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The Bank of England raised interest rates in the UK by 50 basis points to 1.75%, It is the sixth time that the central bank raises interest rates since last December.
The current interest rate is the largest increase in interest rates in the UK in 27 years. Soaring inflation continues to cripple the finances of millions of families.
Global markets were expecting the Bank of England to raise interest rates by the largest amount since 1995, Despite the rising risk of recession, In an effort to prevent high inflation from becoming part of the British economy.
The core inflation rate in Britain rose to 9.4 percent, And it could reach 15 percent in early 2023, according to the Resolution Foundation. The fallout from the war in Ukraine combines with post-pandemic pressures on the global economy.
In June, the Bank of England, which has already raised borrowing costs five times since December,said, It will move aggressively if inflationary pressures become more constant.
and since then, Inflation expectations have eased a bit among the public, and corporate pricing plans have moderated. Which could give the MPC an argument for a commitment to move the interest rate by a quarter of a percentage point.
But the pressure on Bank Governor Andrew Bailey and his colleagues intensified after the large interest rate increases approved by the US Federal Reserve, the European Central Bank and other central banks. This led to a weakening of the value of the pound sterling. Which could exacerbate inflation.
In his latest forecast in May, The Bank of England said it expects almost no growth for the British economy before 2025 at the earliest.