Bank of England announces another 0.5 percent increase – live

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The Bank of England has hiked interest rates by 0.5 percent in the largest hike since 2008.

The bank’s key interest rate is now 2.25 percent, up from 1.75 percent when rates were last raised in August.

It marks the seventh consecutive year that the key rate has risen and further increases are expected later in the year, with some analysts predicting a 3 percent high by the end of the year.

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The decision to raise interest rates is an attempt by the Bank to address inflation or rising prices.

The bank, which is independent from the government, aims to keep inflation below 2 percent.

But inflation, fueled by the Russian war in Ukraine and rising energy costs, is currently rising to 9.9 percent and is expected to rise further.

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Bank expects GDP to fall by 0.1 in the coming quarter

The Bank of England has said it now expects a 0.1 percent GDP decline in the current quarter, indicating the country is already in recession.

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Bank raises interest rate by 0.5 percent

The Bank of England has hiked interest rates by 0.5 percent in the largest hike since 2008.

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The bank’s key interest rate is now 2.25 percent, up from 1.75 percent when rates were last raised in August.

It marks the seventh consecutive year that the key rate has risen and further increases are expected later in the year, with some analysts forecasting a high 3 percent by the end of the year.

My colleague Thomas Kingsley has more about this story below:

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Crypto market crashes to annual lows after rate hike

Bitcoin and the broader crypto market slipped close to annual price declines on Thursday following a move by the US Federal Reserve to raise interest rates to their highest level in nearly 15 years.

The rate hike was widely expected, meaning the cryptocurrency market downturn was not as bad as some analysts feared, although the Bank of England is also expected to raise rates on Thursday.

Anthony Cuthbertson reports:

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Former member of the banking committee expects an increase of 0.75%

A former member of the Bank’s monetary policy committee expects interest rates to rise by 0.75 percent.

Sir John Gieve, who helped set interest rates between 2006 and 2009, spoke to the UKTN earlier.

“I expect interest rates to continue rising in future meetings and I think the markets generally expect interest rates to rise above 3 percent by the end of this year,” he said.

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Borrowers told to ‘lock in’ ahead of expected rate hike

A broker has warned borrowers to anticipate the bank’s expected rise in interest rates.

Lewis Shaw, of broker Shaw Financial Services, said: “Borrowers should buckle up.

“The writing is on the wall for a significant hike in bank rates and lenders have preemptively raised rates as they don’t want to be caught short scrambling to re-price their deals.”

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Federal Reserve raises interest rate by 0.75% in last step to fight inflation

The UK is not the only country raising interest rates to curb rising inflation fueled by Vladimir Putin’s war in Ukraine.

The Federal Reserve – the central bank of the US, comparable to the Bank of England – raised interest rates by 0.75 percent for the third consecutive month.

As a result, short-term interest rates are at their highest level since before the 2008 financial crisis.

My colleague Andrew Feinberg reports:

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What are economists saying about the rate hike?

“Investors believe the most likely outcome is that the MPC will raise bank rates by 75 bps (0.75 percentage points) on Thursday,” said Samuel Tombs, the UK’s chief economist at Pantheon Macroeconomics.

But he said economists expect a smaller increase, to 2.5 percent — the same 0.5 percentage point change as the Bank’s latest increase.

“For starters, aggressive surprises from the MPC have been much less common in the past year than milder surprises,” he said.

In addition, Governor Bailey openly referred to a 50 basis point increase ahead of the August meeting, but he has not pushed markets to implement a 75 basis point price increase.

“We think the MPC will still view a 50 basis point increase as consistent with its promise to act ‘powerful’ if it sees signs of more continued inflationary pressures.”

ING economist James Smith said the Bank of England will have to respond to the recent decline in the pound’s price. Sterling hit a new 37-year low against the dollar on Friday.

“The Bank of England meeting is crucial,” he said.

“It will tell us not only how concerned policymakers are about the decline in sterling and other UK markets, but also how the government’s decision to limit energy prices for households and businesses will translate into monetary policy.”

“We are close for a 50bp hike on Thursday, bringing bank rates to 2.25 percent, although 75bp is clearly on the table and we expect at least a few policymakers to vote for it.”

He said interest rates are likely to rise again in November and December, reaching 3 percent by the end of the year.

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BoE to raise interest rates

The Bank of England was supposed to make an announcement earlier this month, but it was postponed due to the Queen’s death.

Its monetary policy committee is due to meet yesterday to finalize the announcement, which is expected around noon.

Markets believe the Bank will unveil the largest rate hike in more than three decades.

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What are interest rates and why are they rising?

An interest rate is a measure that tells you how high the costs of borrowing money are, or how high the benefits of saving are.

When you borrow money, usually from a bank, the interest on that money is the amount you have to pay to borrow it.

It is an expense on top of the total loan amount and is shown as a percentage of the total.

My colleague Holly Bancroft has more:

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Good morning

Good morning and welcome to UKTN’s ongoing coverage of the Bank of England’s announcement on interest rates.

Analysts expect interest rates to rise by at least 0.5 percent, possibly 0.75 percent, in what would be the largest rise in some 30 years.

The Bank’s announcement is expected around noon. We’ll bring you the latest news and comments as they come in.

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