Daily Management Review

Bank of England raises interest rate to 13-year high


The Bank of England raised its benchmark interest rate to 1% from 0.75% per annum at Thursday's meeting, a 13-year high, and maintained its buyback programme from the market, according to a press release from the regulator.

The central bank left the volume of asset purchases from the market unchanged at £867 billion: government bond purchases remained at £847 billion and corporate bond purchases remained at £20 billion.

The central bank's decisions were in line with the forecasts of analysts surveyed by DailyFx.

"The Bank of England's Monetary Policy Committee sets monetary policy with the aim of achieving the 2% inflation target and to help support (the economy) growth and employment. At its May 4, 2022 meeting, the committee voted overwhelmingly... to raise the bank rate... to 1%," the watchdog said in a statement.

The central bank notes that the conflict in Ukraine resulted in a significant deterioration in economic growth prospects globally and in the UK. Further, it added that fears of more supply chain disruption have risen both because of the situation around Ukraine and because of the burgeoning coronavirus outbreak in China.

The Bank of England raised its forecast for UK inflation in 2022 to 10.25% from an earlier forecast of 5.75% at the end of Thursday's meeting and kept the country's growth forecast at the February estimate of 3.75%, the watchdog said in a report.

The central bank lowered its forecast for UK GDP growth in 2023 to 1% from the previous 1.25% and raised its inflation forecast to 3.5% from 2.5%.

source: dailyfx.com