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Tuesday, December 06, 2022

Bank of England raises rates to 1.75% and predicts prolonged recession in UK

Bank of England picked up this Thursday interest rates in uk The year-on-year increase in inflation led to a sustained increase in inflation from 1.25% to 1.75%, the highest level since December 2008, at 9.4%.

The rise, widely expected by analysts, responds to a rise in prices due to economic recovery after the pandemic, the war in Ukraine and rising energy costs.

At the end of its meeting, the monetary policy committee of the English issuing bank opted for this new increase, while the unit warned UK recession,

The nine-member committee voted eight to one in favor of increase in value of money al 1,75%.

As reported by the English unit, the committee – which aims to keep inflation around 2% – considered that a coercive measure from energy prices was “justified”.

“Overall, the faster pace of policy tightening in this meeting will help bring down inflation. 2% return on target permanently in the medium term, and subsequently to mitigate the risk of longer and more expensive tightening cycles,” the bank said.

The unit stressed that bulk gas prices have practically doubled since May due to Russia’s decision to restrict gas supplies to Europe and the risk of further sanctions.

“As it goes in retail energy pricesWill exacerbate the fall in real UK household income and push inflation further.”

Similarly, the Bank has forecast a higher growth in inflation, which may climb to 13% in the last quarter of the year and remain high throughout 2023, although a downward trend is expected later.

The entity projects that the United Kingdom enters a protracted recession – which could last more than a year – by the last quarter, while it forecasts that real household income will fall sharply this year and into 2023.

British energy regulator Offgame reported today that energy bills will change every three months to avoid major price shocks.

Currently, the maximum price that energy companies are authorized to charge their customers is set every six months, but the revision responds to the current change in prices.

In October 2021, energy price range It stood at 1,400 pounds (1,666 euros) per year, but rose to 1,971 pounds (2,345) last April. The price is expected to climb to £3,358 (3,996 euros) this October.

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