The Bank of England raised interest rates by 50 basis points on Thursday to 3.5%, imitating the US Fed in reducing the pace of monetary tightening. The decision was already expected and was defended by 6 of the 9 members of the Monetary Policy Committee: on the margins, two members voted for no change and one voted for a 75 point increase.
The rise in interest rates, which raised them to the highest level since 2008, will not have been the last. The Bank of England says there should be more increases in the coming months and guarantees it will be available to act “vigorously” if necessary to control inflation, which is at a 41-year high, at 10.7%.
“The market, at the moment, anticipates a spike in interest rates of 4.5%,” Commerzbank analysts write in a reaction note: it would mean another 100 basis points of increase. The German bank believes that the highest point of interest rates, in this cycle, will not be so high: “In a context of economic data that is expected to be very weak in the spring, the Bank of England should increasingly consider whether the The rise in interest rates will not be excessive, especially since its effect takes time to be felt.” The British central bank will not go beyond 4.25%, Commerzbank believes.
USA The Federal Reserve raises interest rates to 4.5%, against inflation, and does not stop there. “We will stay the course until the mission is accomplished”
Source: Observadora
