Sixth interest rate increase in England by half a percent


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Inflation among the western neighbors rises to 13 percent.

The Bank of England has raised the key interest rate in Great Britain by 0.5 percentage points. It is the biggest interest rate increase since 1995. It will be used by the British central bank to fight high inflation, which rose further in June to a new high in forty years. Energy and fuel prices in particular have risen sharply due to the war in Ukraine, and the central bank expects the cost of living for Britons to rise further.

The Bank of England was one of the first central banks to raise interest rates in December and has now raised them to 1.75 percent six times in a row. British interest rates are thus well above the level from before the corona crisis, when interest rates were lowered to support the economy during the shutdowns. By raising interest rates, it becomes more expensive to borrow money and there is less money available, which should push prices down.

The interest rate step of 0.5 percentage points was in line with economists’ expectations. Bank of England policymakers did not agree on the interest rate decision. One of the nine directors voted for an interest rate increase of a quarter of a percentage point. Policymakers also declared that they would continue to take strong measures to fight inflation.

Inflation in Great Britain rose to 9.4 percent in June. In addition to energy prices, food prices also rose sharply. As a result, UK consumer confidence fell to an all-time low in June. And the situation threatens to become even more serious for many Britons.

The Bank of England now expects inflation to rise further this year to more than 13 percent in October, partly as a result of the more expensive energy contracts that many Britons have to deal with. The previous interest rate decision in June was based on a peak inflation level of just over 11 percent. In addition, the central bank believes that the UK economy will enter a recession in the fourth quarter, which is expected to last for five quarters.

The Bank of England has raised the key interest rate in Great Britain by 0.5 percentage points. It is the biggest interest rate increase since 1995. It will be used by the British central bank to fight high inflation, which rose further in June to a new high in forty years. Energy and fuel prices in particular have risen sharply due to the war in Ukraine, and the central bank expects the cost of living for Britons to rise further.

The Bank of England was one of the first central banks to raise interest rates in December and has now raised them to 1.75 percent six times in a row. British interest rates are thus well above the level from before the corona crisis, when interest rates were lowered to support the economy during the shutdowns. By raising interest rates, it becomes more expensive to borrow money and there is less money available, which should push prices down.

The interest rate step of 0.5 percentage points was in line with economists’ expectations. Bank of England policymakers did not agree on the interest rate decision. One of the nine directors voted for an interest rate increase of a quarter of a percentage point. Policymakers also declared that they would continue to take strong measures to fight inflation.

Inflation in Great Britain rose to 9.4 percent in June. In addition to energy prices, food prices also rose sharply. As a result, UK consumer confidence fell to an all-time low in June. And the situation threatens to become even more serious for many Britons.

The Bank of England now expects inflation to rise further this year to more than 13 percent in October, partly as a result of the more expensive energy contracts that many Britons have to deal with. The previous interest rate decision in June was based on a peak inflation level of just over 11 percent. In addition, the central bank believes that the UK economy will enter a recession in the fourth quarter, which is expected to last for five quarters.

The interest rate increase in Great Britain follows the sharp increase in interest rates from the US central bank, which last week raised the interest rate again by 0.75 percentage points. In the euro area, interest rates were raised in July for the first time since 2011. The European Central Bank (ECB) ended an eight-year period of negative interest rates in the euro area with an interest rate step of 0.5 percentage points.

(ANP)

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