The Bank of England raised the rate to 5.25%
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The Monetary Policy Committee of the Bank of England at a meeting on August 2 decided to raise the interest rate by 0.25 percentage points to 5.25%, reported on the regulator’s website. This is the highest value since April 2008.
The decision to raise the rate for the 14th time in a row was supported by six committee members, one suggested leaving the rate at 5%, and two more suggested raising it to 5.5%. This division of opinion happened for the first time this year, notes Reuters.
According to the regulator’s forecast, inflation in the UK, which reached a 40-year record of 11.1% in 2022 and dropped to 7.9% in June, will fall to 4.9% by the end of the year. At the same time, reaching the target level of 2% will take place only in the second quarter of 2025.
“The Committee will ensure that the bank rate is tight enough for a long enough time to bring inflation back to the target level of 2% in the medium term,” the regulator said, pointing to the manifestation of more sustained inflationary pressures.
At the end of July, the European Central Bank (ECB) raised all three rates by 0.25 percentage points: the key rate from 4% to 4.25%, the margin rate from 4.25% to 4.5%, and the deposit rate from 3.5%. up to 3.75%. This was the ninth increase in a row, the key rate reached the highs of the 2008 financial crisis.
The ECB expects a significant slowdown in eurozone economic growth due to lower domestic consumer demand, tightening financial conditions and persistent inflation. Industrial activity will remain subdued due to weak external demand.
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