It appears that even more interest rate hikes are set for the country’s future. The Bank of England governor, Andrew Bailey has promised that he and Threadneedle Street will see the job of reducing inflation through.
This does not constitute advice and advice should be sought in all instances before acting on it.
Bailey hinted at a 14th consecutive increase in the cost of borrowing to be announced next month. At the annual Mansion House dinner Bailey and finance minister Jeremy Hunt will address the City of London’s financial elite. Updated reports will be available to the public soon, but the pair were expected to speak about how inflation is “unacceptably high.” Their aim will be to get back to the government’s target of 2%. However, thanks to levels of price and wage increases, inflation is only sitting at 8.7%, and without action, it will likely stay that high.
The Bank of England has raised the Bank rate by nearly five percentage points over the last 20 months. Though they concede that tightening is still to come with forthcoming policy, they assert that when headline inflation falls, underlying inflation pressures will subside.
The Bank’s monetary policy committee has been monitoring developments, particularly in the labour market, wage growth, and in services price inflation, to determine whether or not pressure is remaining persistent.
What will contribute heavily toward the Bank’s decision is the next set of official wage growth figures and the most recent cost of living data, both anticipated in the next few weeks. What happens to the current 5% interest rate after that? The financial markets have suggested that in order to bring inflation under control, the Bank of England will need to raise the rates above 6%.
And Bailey is determined to finish the job of reducing inflation and stabilising the UK’s economy. It’s the Bank’s position that this is the best contribution monetary policy can make to the success of the UK’s economic recovery.
Concerned about how increasing interest rates will affect you? Be sure to get in contact with your trusted financial adviser to ensure you’re prepared for anything.