After the US central bank, the Bank of England (BoE) also raises interest rates by 25 basis points. This brings the UK interest rate to 4.25 per cent – a quarter of a percentage point lower than the record interest rate during the 2008 financial crisis.
Analysts had expected UK interest rates to remain unchanged. But after the dramatic news that inflation had risen sharply against expectations in February, things have changed. RaboResearch economist Stefan Koopman explains that the banking crisis actually led analysts to believe that interest rates would stay the same. Investors therefore thought that the central bank might be stalling. But because of the new inflation data, everyone came to the conclusion that there was no other option than to raise interest rates.’
“Perspectives May Change”
However, the situation can also change quickly, warns the economist. Two weeks ago, Fed Chief Jerome Powell opened the door for a 50 basis point rate hike. Less than a day later, trouble broke out at Silicon Valley Bank.” Partly because of this, many economists questioned the ambitious rate hike. “Then the question arose whether interest rates could be raised. This shows that we are in a moment of great financial uncertainty, in which the prospects can change from one day to the next”.
Continued high inflation means further interest rate hikes are still on the table, BoE bankers say.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
