The Bank of England has announced another rate hike this Thursday, of 25 points, to bring the rate to 4.25%. Chaining eleven increases already, the great objective is to tame inflation of 10.4%, which has been in double figures for half a year and rose three tenths in February.
The increase this time has been the smallest undertaken by the institution since June 2022. Thus, unlike the Fed in the US and the European Central Bank (ECB), it has reduced the pace of its rate hikes coinciding with the appearance of turbulence in the financial markets after the intervention of SVB and Signature Bank in the US and the rescue of Credit Suisse.
The entity does not close to new increases. He will continue to closely monitor “signs of persistent inflationary pressures, including tight labor market conditions and the behavior of wage growth and service inflation,” he said in a statement. The Bank of England is concerned about the strength of the labor market, as wage growth, despite having cooled somewhat recently, is well above its historical average and labor shortages remain acute, all of which are inflationary.
“If there were signs of more persistent pressures, further tightening of monetary policy would be necessary,” he concluded.
Despite an unexpected jump in prices in February, inflation in the second quarter would be lower than expected by the Bank of England last month, according to the statement, after the fall in international energy prices and the fact that the Chancellor of the Exchequer, Jeremy Hunt, announced last week an extension of state subsidies to limit household energy bills.
