UK interest rate hike to 1%… “Inflation 10%, negative growth next year” warning (2 reports)

BOE raised by 0.25%P and raised 4 times in a row, the highest in 13 years… 3 out of 9 opinions for a 0.5%p increase

“Inflation pressures sharply escalate due to war in Ukraine, worsening growth prospects”

(London = Yonhap News) Correspondent Choi Yun-jeong = The UK’s key interest rate rose to 1%, the highest in 13 years.

The Bank of England (BOE), the central bank of the UK, announced on the 5th (local time) that the Monetary Policy Committee (MPC) had raised the key interest rate by 0.25 percentage points from 0.75% to 1.0%.

This is the highest level since February 2009 (1.0%).

The interest rate decision was approved by six members of the Monetary Policy Committee. Three people voted for a 0.5 percentage point increase and expressed the opinion that we should respond more actively to inflation.

The day before, the US Federal Reserve (Fed) announced a ‘big step’ to raise interest rates by 0.5 percentage points. The Fed, however, has sent a message that it is not necessary to increase the rate of interest rate hikes to 0.75 percentage points.

The BOE started raising interest rates in December last year to catch inflation.

After the COVID-19 outbreak, it was lowered to 0.1%, the lowest level in history, and then increased by 0.15 percentage points and then by 0.25 percentage points.

This is the first time the base rate has been raised four times in a row since the BOE became independent in 1997.

Although there are concerns about an economic slowdown due to the Ukraine war, it seems that they have decided that the price problem is more urgent right now.

UK consumer prices rose 7% in March. The BOE predicted that the inflation rate would peak in the fourth quarter, reaching 10.25%.

This is the highest level in 40 years since 1982. The prospect of a 40% increase in energy rates in October is likely to have a big impact.

The inflation peak for this year suggested by the BOE in April was 8%, and the policy target price is 2%.

In addition, the game situation is not serious.

The BOE predicted negative growth by lowering its growth forecast for next year from 1.25% to -0.25%. The growth rate for 2024 has also been lowered from 1% to 0.25%.

The BBC said that when it released its growth forecast in February, it was already at the lowest level in the G7.

BOE President Andrew Bailey has warned that the economy will slow down very sharply, although it does not meet the preliminary criteria for a recession.

“After the Russian invasion of Ukraine, global inflationary pressures have intensified sharply,” the BOE said in a statement.

The BOE said that China’s coronavirus lockdown also adds to the supply chain shock.

The BOE forecasts that real household disposable income will contract by 1.75% this year, the biggest contraction since 2011.

Bailey feared that the lowest-income people with little savings would suffer especially.

At the same time, the BOE said it would consider starting the process of selling its government bonds worth £850 billion, and that it would update the plan at its August meeting.

The BOE has said that when interest rates rise above 1%, it will actively start selling Treasury bonds purchased during QE.

merciel@yna.co.kr

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2022/05/06 02:15 Send