The Bank of England has announced that interest rate will be increased from 0.5% to 0.75% the third consecutive increase. The Bank of England Act 1998 gives the Bank of England operational responsibility for setting monetary policy to meet the Government’s inflation target. The move takes rates back to where they were before the pandemic struck. The Monetary Policy Committee (MPC) central projections in the February Monetary Policy Report, published before Russia’s invasion of Ukraine, UK GDP growth was expected to slow to subdued rates during the course of this year.
The report predicts CPI inflation to increase in coming months, to around 8% in 2022 Q2. CPI inflation is measured by consumer price index (CPI) and defined as the change in the prices of a basket of goods and services that are typically purchased by specific groups of households. The latest rise in energy futures prices means that Ofgem’s utility price caps are expected to increase further when they are reset in October 2022.
UK-weighted global GDP in 2022 Q1 was expected to grow by a little more than had been expected in the February Report, particularly in the euro area.
Source: Bank Of England
Bank Rate increased to 0.75%