SAWT BEIRUT INTERNATIONAL

| 29 March 2024, Friday |

Bank of England raises rates, says inflation set to fade

The Bank of England (BoE) raised interest rates for the 11th time in a row on Thursday, but said a surprise resurgence in inflation would probably fade fast, prompting speculation it had ended its run of hikes.

Sounding more upbeat about the outlook for Britain’s sluggish economy but noting the risks posed by turmoil among global banks, the BoE’s nine rate-setters voted 7-2 in favour of a 25 basis-point increase in Bank Rate to 4.25%, as expected by economists polled by Reuters.

BoE Governor Andrew Bailey was non-committal when asked about the latest rate rise. “We don’t know whether it’s going to be the peak,” he told broadcasters.

“What I can tell you is that we’ve seen signs of inflation really peaking now. But of course it’s far too high…. We need to see it starting to come down progressively and get back to target.”

The BoE – which is trying to reconcile the weak economic outlook and anxieties about global banks with stubborn inflation – repeated a message it gave last month that suggested raising rates was less urgent.

“The MPC will continue to monitor closely indications of persistent inflationary pressures, including the tightness of labour market conditions and the behaviour of wage growth and services inflation,” the BoE said.

“If there were to be evidence of more persistent pressures, then further tightening of monetary policy would be required.”

    Source:
  • Reuters