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BoE raises interest rates to 13-year high

Bank of England (BoE) headquarters. Photo: Reuters

Central Bank of Great Britain (BoE) just raised the base rate for the fourth time in a row to contain it inflationary, which is the cause of the current cost of living crisis. Specifically, the BoE raised interest rates by 0.25 percentage points to 1% – the highest level since the global financial crisis in 2009.

The above move of the BoE also followed the decision on May 4 of the US Federal Reserve (FED), in which the US central bank raised interest rates by 0.5 percentage points in the context of rising inflation. boom in the world’s largest economy.

Central banks around the world are tending to raise interest rates, while inflation is at its highest level in decades. Prices have risen since economies reopened in the wake of the pandemic, and after tensions in Ukraine exacerbated already high energy costs.

Inflation in the UK in March increased by 7% year-on-year and was the highest in 30 years. This rate is expected to touch 10%, the highest level in 40 years.

BoE Governor Andrew Bailey said the bank was looking to tackle high inflation while avoiding the UK falling into recession.

Earlier, Mr. Bailey also warned that high inflation would erode workers’ wages and cause the economy to slow down.

The British pound fell 1.2% against the dollar after the news of interest rate hike.

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