{"id":43460,"date":"2023-09-19T09:39:34","date_gmt":"2023-09-19T09:39:34","guid":{"rendered":"https:\/\/histarmar.net\/?p=43460"},"modified":"2023-09-19T09:39:34","modified_gmt":"2023-09-19T09:39:34","slug":"boe-preview-final-rate-hike-on-cards","status":"publish","type":"post","link":"https:\/\/histarmar.net\/economy\/boe-preview-final-rate-hike-on-cards\/","title":{"rendered":"BoE Preview: Final Rate Hike On Cards"},"content":{"rendered":"
The Bank of England is all set to end its tightening cycle with a final rate hike this week as any further increase will push the UK economy<\/span> into a deep recession. <\/p>\n The record high wage growth as well as persistently high inflation strengthened the call for additional policy tightening. <\/p>\n However, the past rate hikes have started to damp the economic activity. Recent economic indicators suggest that the economy has entered a mild recession. <\/p>\n Markets widely anticipate a quarter-point increase on September 21, a day after the release of the consumer price inflation data. <\/p>\n Although inflation has continued to weaken over the recent months, July’s 6.8 percent was more than double the official target of 2 percent. <\/p>\n The central bank has increased its policy rate over the last 14 consecutive sessions. At 5.25 percent, the bank rate is currently the highest since early 2008.<\/p>\n As seen in August, a three-way split on the nine-member Monetary Policy Committee, led by Governor Andrew Bailey, is more likely with members seeking a half percentage point and a quarter point hike, while others calling for no change. <\/p>\n Capital Economics’ economist Paul Dales said sticky inflation would force the BoE to keep interest rates at their peak 5.50 percent until late in 2024. <\/p>\n However, once the bank eventually starts cutting the rate, they will be reduced further and faster than investors anticipate, Dales added.<\/p>\n The BoE can probably afford to end its tightening cycle this week, ING economists said. <\/p>\n “Assuming though that the fall in services inflation and wage growth is pretty gradual, we think a rate cut is unlikely until at least the second quarter of next year,” they added.<\/p>\n At the August meeting, BoE policymakers had signaled that the interest rate is set to remain high for long. <\/p>\n They said it will be ensured that bank rate is sufficiently restrictive for sufficiently long to return inflation to the 2 percent target sustainably in the medium term. <\/p>\n