The Bank of England expected hike interest rates again on Thursday when it is struggling to rise inflation and weak economic growth.

Bank Monetary Policy Committee It is expected that the base rate will be raised for the fifth time in a row to 1.25%.

At its May meeting, the Bank raised the base rate to 1 percent, the highest in 13 years.

If on Thursday they will go for another increase, it will be the first time since January 2009, when the rate was above 1 percent.

Some even speculated that it could reach 1.5 percent – the so-called growth of 50 basis points.

But that was before official figures showed that gross domestic product (GDP) had shrunk by 0.3 percent, worse than many had predicted.

Now a commission of nine people will decide which outcome will be best. Among them are Andrew Bailey, head of the bank, two deputy heads: Sir John Canliff and Ben Broadbent; but also Hugh Peel, its chief economist.

“GDP data in April … will definitely mean that the domestic bloc – Bailey, Broadbent and Pill – is sticking to a vote to raise the bank’s rate by 0.25 per cent this month,” said Samuel Tombs, chief economist at Pantheon Macroeconomics. .

“And given that some members felt last month that instructions to further raise interest rates were outdated, we expect at least one of them, most likely Canlif, to vote for no change.

“Due to market prices currently rising by 34 basis points this week and another 41 basis points at the August meeting, we expect both expectations on rates and pounds to fall after the meeting on this week. “

Committee members will want to curb inflation, which has reached a maximum unnoticed for decades.

Leith Khalaf, head of investment analysis at AJ Bell, said: “The Bank of England faces a severe test of its courage at the next interest rate decision, and any hesitation is likely to punish the pound in foreign exchange markets. ”

Such a fall would mean rising prices for petrol and diesel, as well as other imports that the UK pays for in dollars. This month, the average supply price of a family car for the first time exceeded £ 100.

Any further leap is unlikely to be welcomed by drivers. There are many signs that the bank may raise rates. The MPC voted for the promotion at each of the last four meetings in December, February, March and May. Last time, three of the nine members of the Monetary Policy Committee had already voted to set the rate at 1.25 percent.

Governor of the Bank of England Andrew Bailey

(REUTERS)

However, some things have changed since then. The UK economy seems to be struggling, and the OECD predicts it will be the weakest in the G7 next year.

“By raising interest rates, the Bank is slowing down an economy that is already slowing down on its own,” Mr Khalaf said.

“It risks stopping in the economy or, worse, going in reverse.”

The Chancellor has given the Bank a little more opportunity to fight, which is going to send billions to families suffering from problems to help them cope with growing electricity bills.

Raising the interest rate will eat up part of this filing because the cost of the loan will rise for homeowners. But drivers will suffer equally if tariffs are maintained and depositors benefit from the increase.

People, of course, expect an increase. According to a survey commissioned by the Bank of England and conducted by Ipsos in early May, 70 per cent of people expect rates to rise over the next 12 months.

A poll released on Friday found that 28 percent believe raising rates will benefit the economy, 22 percent said the same about falling, and 28 percent want them to stay at current levels.

Additional Press Association reports.

https://www.independent.co.uk/news/business/june-16-bank-of-england-interest-rate-b2102326.html

Previous articlePremier League schedule 2022-23. CLUB-FOR-CLUB MILITARY: find out about the game days of EVERY team in the new season
Next articleNHL rumors: Anaheim Ducks – John Gibson, who remains who may be on the move