Rate Hike at the Bank of England

February 3, 2022

After a scheduled meeting of the Bank of England Monetary Policy Committee, the BOE Bank rate was doubled to 0.5%. The increase follows a 15-basis point hike in December and lifts the rate level to its highest point since March 2020. The 25-basis point size of today’s hike was as analysts expected but accompanied with surprising news that four of nine committee members favored a 50-basis point increase today. Officials also agreed to whittle down their balance sheet by stopping the practice of reinvesting maturing assets acquired through bond-buying during the pandemic. Today’s meeting coincided with publication of the quarterly Monetary Policy Report in which CPI inflation is now expected to crest in April at 7.25% versus a previously assumed 6.0%. The medium-term inflation target is 2%. More small incremental bank rate increases are expected to follow.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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