The Bank of England is likely to announce its biggest interest rate increase in more than 27 years today [Macau time] as it seeks to rein in accelerating inflation driven by the fallout from Russia’s invasion of Ukraine.
Most economists expect the bank’s monetary policy committee to approve a half-percentage point increase after Gov. Andrew Bailey said two weeks ago that the United Kingdom’s central bank would “act forcefully” if the inflation picture worsened. That would push the bank’s key interest rate to 1.75%, the highest since the depths of the global financial crisis in December 2008.
The Bank of England has been criticized for moving too slowly to combat inflation, which accelerated to a 40-year high of 9.4% in June and has driven a cost-of-living crisis. While the central bank has approved five consecutive rate increases since December, none has been more than a quarter-point.
By contrast, the U.S. Federal Reserve increased its key rate by three-quarters of a point in each of the past two months to a range of 2.25% to 2.5%. Even the European Central Bank’s first increase in 11 years was a larger-than-expected half-point hike last month.