The Bank Of England Has Broken A 33-Year Record By Increasing Interest Rates To 3%
Ever since the pandemic hit the United Kingdom, the situation has continued getting more and more complicated for the country.
Crises in the United Kingdom
It was during the pandemic the country decided to go for Brexit, which pushed the country’s economy back.
Although the country has a bright future ahead of Brexit other factors are really testing the patience of the country’s governments.
Now, as the macroeconomic pressures continue hitting the country and the inflation rates keep rising, the country has to take serious measures.
Prime Minister Resignations
The country is already facing a great crisis when it comes to choosing the right Prime Minister. In the year 2022 alone, the country has seen three Prime Ministers.
It was Boris Johnson who resigned from his post in 2022, and he was succeeded by Liz Truss who resigned almost two months after being elected.
Liz Truss also resigned and she has been succeeded by Rishi Sunak, who is the leader of the conservative party, a politician, and a financier.
Bank of England Makes a Difficult Decision
Prior to Rishi Sunak, it was assumed that neither of the Prime Ministers knew how to handle the rising inflation rates.
However, as Rishi Sunak has become the new PM of the United Kingdom, he has already started working with the Bank of England to take extreme measures.
According to the latest reports, the Bank of England has decided to increase the interest rates in the United Kingdom at a high rate. As per the economists, this is going to break the 33-year record of interest rate hikes.
The reports suggest that the bank rate, which is also referred to as the borrowing money cost would be increased by 0.75%. This would bring the particular interest rate up to 3%.
The Monetary Policy Committee (MPC) has announced that the voting was carried out at the Bank of England. At the conclusion, it was announced that 7 votes favored the hikes and 2 opposed the proposal.
High Inflation Rate in the UK
While the United States has successfully kept its inflation rate under double-digits, the United Kingdom has not been successful with its policies.
It is a huge matter of concern for the United Kingdom that its inflation rates have hit double-digits and it ended up hitting 10.1% in October.
It has happened for the second time in three months that the inflation rates for the United Kingdom have entered double-digits.
According to the MPC, the 10.1% inflation rate for October is much higher than their estimation of a 2% inflation rate.
Rise Expected in the GBP Price
As the UK has followed the same policy as the US, it is expected that a rise would be witnessed in the trading price of the UK.
This would help the UK fight the rising inflation rates and also help the country in dealing with the declining price of the GBP.