The Bank of England is almost certainly to increase borrowing costs on Thursday, according to a poll by Reuters. This would mark the third consecutive meeting where the central bankers in England would raise rates.
Consistent with other central banks BoE slashed rates to record to tackle the pandemic hit economy and now is facing soaring inflation which in England has reached 30-year high of 5.5% in January and expected to accelerate further.
BoE was the first major central bank in the world to raise rates since the pandemic began two year ago. The Federal Reserves of the United States is expected to raise rates by 25 basis points on Wednesday. On the other hand, the European Central Bank has set course to increase rates later this year.
The Monetary Policy Committee of BoE is expected to add 25 basis points to Bank Rate this week, to 0.75% which would be at pre-pandemic level- according to Reuters poll.
In terms of economic progress the British economy grew much faster than expected, expanding by 0.8%, according to official data. However, global economics faces greater challenges after Russian invasion of Ukraine, which has stalled growth, contained supply chain and elevated inflation.
“The economic consequences of the war in Ukraine have worsened the already tricky mix between soaring inflation and slowing GDP growth,” said Paul Dales at Capital Economics, as reported by Reuters.
