Finance

Bank of England Raises Interest Rates for Fifth Time, UK Inflation to Reach 11%

JUN 16 2022·Updated DEC 28 2022

Story

Image credit: Bloomberg/Getty Images [via CNN]

The Facts

The Bank of England (BoE) increased interest rates by 25 basis points (0.25 percentage points) to 1.25% on Thurs., bringing its main interest rate to a 13-year high.
Business Insider
The fifth hike since Dec. comes as the BoE announced it anticipates inflation will rise above 11% in Oct., with grocery price rises potentially topping 15% over the summer.
CNN
The UK is facing the worse cost of living crisis in decades, with the war in Ukraine having further pushed up energy, food and fuel prices. The interest rate rises will have a direct affect on borrowing costs, with Brits on variable rate mortgages likely to see an imminent rise in costs.
Daily Mail
Although rate rises are intended to dampen inflation by making borrowing less attractive, the Monetary Policy Committee is acting cautiously as further stagnating growth risks pushing the UK into recession.
wsj
Also on Thurs., the BoE stated it expects a 0.3% contraction in the UK economy over the second quarter, following a contraction between Mar. and April already this year.
wsj
The BoE's decision comes a day after the US Federal Reserve raised interest rates by 0.75 percentage points, the biggest hike in almost three decades.
BBC News

Sources Split

LEFT

CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

The Bank of England is acting too modestly after it successively failed to foresee inflation rises. This is a new era of instability that demands more aggressive action to deter borrowing and strengthen the UK economy.

Spectator (UK)

Narrative B

Today's central bankers don't have a choice, they have to raise interest rates gingerly to tackle inflation without wrecking economic growth. Although they are doing a thankless task, they will eventually be lauded for making the difficult but right decision that risks dampening the UK economy to protect long term stability.

The New Statesman