United Kingdom: BoE hikes by 75 basis points in November
November 3, 2022
On 3 November, the Bank of England (BoE) increased the bank rate from 2.25% to 3.00%, marking the eighth successive rate hike. Two Bank members voted to raise rates by a smaller amount.
The Bank’s decision to tighten its stance was driven by the desire to tame inflation, which is currently in double digits and more than five times the Bank of England’s 2.0% target. The Central Bank also commented that the labor market was tight and that wage growth had firmed, and stated that inflation projections were skewed to the upside in the medium term.
The Bank stated that “further increases in Bank Rate may be required for a sustainable return of inflation to target”. However, the BoE also said rates would peak below the 5.25% expected by financial markets at the time of the Bank’s meeting. The Consensus is for the bank rate to peak at slightly over 4% in mid-2023.
Author: Oliver Reynolds, Economist