My Crypto Lawyer
On March 21, the Bank of England (BOE) interest rate committee will decide its next target, currently at 5.25%. The central bank’s decision may affect finance markets and the economy, while the authority struggles to fight inflation.
Interestingly, the BOE started an interest rate increase policy with the end of the COVID-19 pandemic, facing high inflation. The United Kingdom’s inflation rate reached record levels in 2022, previously seen in 1990, according to data from MacroTrends.
However, the central bank’s director, Andrew Bailey, believes current inflation data suggests “good news” for the economy. Investors received this information with high enthusiasm and understood it as a hint to the Bank of England’s further decisions.
Yet, Bailey made it clear on February 15 that the committee will not rush on rate cuts moving forward.
BOE historical interest rate decisions
The UK central bank raised interest rates 14 times between December 2021 and August 2023. During this time, target rates skyrocketed from an all-time low of 0.1% to their current high of 5.25%. The unprecedented behavior is evidenced by the historical data on the Bank’s website.
Looking at past events, Martin Beck, chief economic advisor to the EY Item Club, said little has changed recently. In December, he noted that inflation and pay growth had slowed more than the Bank expected.
“There’s been nothing in the way of significant economic surprises over the last four weeks and inflation and pay growth have slowed (the former by more than the Bank of England expected).”
As reported by The Standard, “Brits have been battered with interest rate hikes” and low confidence in future improvements. A recent Bank of England survey revealed the public believes inflation will remain at high levels until late 2028. Therefore, this could motivate further waiting before a policy change.
Similarly, the United States Federal Reserve has been applying a similar policy to fight the country’s inflation. Nevertheless, these “anti-inflation” policies have not rendered the expected results, raising doubts about whether they are working.
All in all, investors await BOE’s next interest rate decision on March 21, which could set new grounds for commodities and different markets like cryptocurrencies and stocks.
Source link in My Crypto Laywer
