Pressure is on the Bank of England to raise the interest rate again today, after the US issued a quarter-point rise.
Wednesday’s raise by the Federal Reserve is the first time the US has raised the interest rate since 2018.
For the Bank of England’s monetary policy committee, things are less clear cut. Any one of three options is possible: another quarter-point increase, a half-point increase, or no change. There are nine MPC members and they could easily split three ways when it comes to the vote.
UK households are being pulled in two directions, with inflationary pressures combining with higher bills, taxes and food prices. The MPC is reportedly nervous about higher prices triggering a wage-price spiral.
Others on the committee are more concerned about the economy hitting a wall in the second half of 2022. Their fear is that over-aggressive interest rate increases will help push the economy into recession.
The smart money seems to be on a rise of a quarter point to 0.75%, returning borrowing costs to their pre-pandemic level.
