The Bank of England (BOE) announced that it will raise the interest rate by 0.5 % points to 4% on Thursday 2 February.
‘High Inflation’ is the cause for raising the interest rate as announced by the BOE. The current rate of interest is at 10% and the BOE aims to lower it to 2%.
The recent increase to 4% is the highest recorded since October 2008. The BOE’s Monetary Policy Committee (MPC) has increased the interest rate for the tenth time in a row.
The U.S. central bank announced a 0.25% increase in interest rates on Wednesday, February 1. The increase tallies the rate of interest at 4.75% from the previous 4.5%. The BOE has increased the interest rate to reduce people from borrowing due to the high-interest rates which are expected to cause a decrease in spending in the market for purchases.
The slow purchases will not increase the prices and eventually help tame the high Inflation rate in the country.
In its announcement, the BOE hinted that there can be a further increase in interest rates if they are unsuccessful in reducing the rate of Inflation.
The BOE will announce its next statement on interest rates on 23 March 2023.
© Vygr Media Private Limited 2023. All Rights Reserved.
