11/3/2022, 1:00 PM (Source: TeleTrader)
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BoE increases interest rate by 75 bps, biggest hike since 1989

The Bank of England's (BoE) Monetary Policy Committee (MPC) revealed on Thursday that it has decided to raise its key interest rate by three-quarters of a percentage point to 3%, marking this the largest rate hike in 33 years. The majority of the MPC members were in favor of a 0.75 percentage point rate hike, with 7-2 vote.

BoE expects the gross domestic product (GDP) in the country to continue to decline in 2023 and the first half of 2024, "as high energy prices and materially tighter financial conditions weigh on spending." The labor market "remains tight, although there are signs that labour demand has begun to ease."

The central bank shared that the "CPI inflation is projected to pick up to around 11% in 2022 Q4," which is lower than the August expectations. According to BoE's projections, CPI inflation should start to retreat "from early next year." If the economy proceeds to follow estimates, "further increases in Bank Rate may be required for a sustainable return of inflation to target, albeit to a peak lower than priced into financial markets."

Baha Breaking News (BBN) / AY