Bank of England Tightens as Expected, and More Moves Lie Ahead
March 17, 2022
The Bank of England as expected engineered a 25-basis point increase in its Bank Rate, but the 8-1 vote included a dissent in favor of a 50-basis point increase. The rate had previously been raised by 15 basis points in December and 25 bps in February, and at 0.75% is now back to its pre-pandemic level. Subsequent to preparing the quarterly Monetary Policy Report in February, Russia invaded Ukraine, and today’s statement asserts that that development is “likely to accentuate both the peak in inflation and the adverse impact on activity by intensifying the squeeze on household incomes.” Inflation will peak later than April, the previous presumed tipping point, and above the 7.25% level that had been predicted. Officials now foresee inflation reaching 8% by late 2022 and perhaps even above that level in 2023. Recent growth has been pleasantly resilient, but is “expected to slow to subdued rates during the course of this year…. he Committee judges that some further modest tightening in monetary policy may be appropriate in the coming months, but there are risks on both sides of that judgement depending on how medium-term prospects for inflation evolve.”
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of England
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