The Bank of England remained with the decision with a gradual hike in interest rates on Thursday in tandem with other central bankers taking immediate action. However, it was emphasized that they were prepared to take ‘forced’ action if necessary to eliminate the dangers posed by rising inflation.
A day after the U.S. Federal Reserve raising rates with the fastest reading since 1994 of 75 basis points, the BoE is more likely to raise bank rates by another 25 basis points with a warning that the British economy will shrink in the April-June quarter.
The Monetary Policy Committee voted (6-3) a 25 basis point increase in the Bank Rate to 1.25%. The breakdown is the same as in May with a minority voting for a 50 basis point increase.
The British benchmark rate is now at its highest level since January 2009, when it cut borrowing costs as the global financial crisis hit. It is the fifth time the BoE has raised rates since December when it became the first major central bank to tighten monetary policy following the COVID-19 pandemic.
Waima so some critics say it is moving too slowly to stop rising inflation from continuing to take root and damage the economy in the long run.
In a day of uncertainty for the British currency, sterling depreciated after the Bank of England (BoE) raised interest rates by 25 basis points (bps), confusing the forecasts of some market participants who expected a bigger rise to fight soaring inflation.
On the other hand, the Swiss National Bank (SNB) joined other central banks in tightening monetary policy with its first rate hike in 15 years, raising its policy rate to -0.25% from -0.75% that has been in use since 2015.
The Swiss franc surged to a two -month high against the euro and is set to excel against the US dollar since January 2015.
