Bank of England raises rates a quarter point
The Bank of England decided to raise, for the third consecutive time, the reference interest rate for its operations by 25 basis points, standing at 0.75 %
The Monetary Policy Committee of the Bank of England decided to increase, for the third consecutive time, the reference interest rate for operations by 25 basis points, going to 0.75 %. The decision was approved with votes in favor against one who preferred to keep the price of money at the previous rate of 0.5 %.
In this way, the monetary organization responds to the perspective on inflationary pressures in the world in the coming months and to the probability that “growth in net energy importing economies, such as the United Kingdom” will be reduced.
The financial entity communicated the decision a day after the United States Federal Reserve began the period of “normalization with a rise of 25 basis points, up to a target range of between 0.25 % and 0.50 %”.
For the decision making, the Bank of England carried out an analysis of the global environment taking into account the invasion that Russia carried out in Ukraine, a fact that has essentially stimulated the rise in inflation, as a consequence of the increase in the prices of “energy and other basic products, including food. As well as the strong probabilities of a disruption in the global supply chain, significantly raising the uncertainty surrounding the economic outlook.
Monetary policy tightening
An analysis of economic activity during 2022 in the United Kingdom shows that the month of January GDP was stronger than estimated, in addition to solid business confidence and the labor market. Consumer hope has declined on the back of shrinking real disposable incomes, which they believe will be larger than expected, consistent with a weaker outlook for growth and employment.
According to the information issued by the entity, “the economy has recently been subject to a succession of very large shocks. Russia’s invasion of Ukraine is another such shock, warning that these are events that monetary policy cannot prevent.”
That is why the Committee is studying applying a moderate additional tightening of monetary policy for the coming months, although it admits that the risks will depend on the evolution of inflation in the medium term.
“The Committee will review these developments in light of incoming data and their implications for inflation over the medium term, including the economic implications of recent geopolitical events,” it said.
M. Rodríguez
Source: eldiario.es
