Bank of England raises rate by 0.15 percentage points to 0.25%

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The Bank of England’s Monetary Policy Committee (MPC) at its meeting ending on December 15, 2021, has voted by a majority of 8-1 to increase Bank Rate by 0.15 percentage points to 0.25 per cent. The MPC sets monetary policy to meet the 2 per cent inflation target, and in a way that helps to sustain growth and employment, UK’s central bank said.

The MPC voted unanimously for the Bank of England to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £20 billion. The MPC also voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £875 billion, and so the total target stock of asset purchases at £895 billion.

The MPC said that the level of global GDP in 2021 Q4 is likely to be broadly in line with the November Report projection, but consumer price inflation in advanced economies has risen by more than expected. The Omicron variant poses downside risks to activity in early 2022, although the balance of its effects on demand and supply, and hence on medium-term global inflationary pressures, is unclear. Global cost pressures have remained strong.

The Bank of England’s Monetary Policy Committee (MPC) at its meeting ending on December 15, 2021, has voted by a majority of 8-1 to increase Bank Rate by 0.15 percentage points to 0.25 per cent. The MPC sets monetary policy to meet the 2 per cent inflation target, and in a way that helps to sustain growth and employment, UK’s central bank said.

Bank staff have revised down their expectations for the level of UK GDP in 2021 Q4 by around 0.5 per cent since the November Report, leaving GDP around 1.5 per cent below its pre-COVID level. “Growth in many sectors has continued to be restrained by disruption in supply chains and shortages of labour. The impact of the Omicron variant associated additional measures introduced by the UK Government and Devolved Administrations and voluntary social distancing will push down on GDP in December and in 2022 Q1,” the central bank’s statement said.

“The experience since March 2020 suggests that successive waves of COVID appear to have had less impact on GDP, although there is uncertainty around the extent to which that will prove to be the case on this occasion,” the statement added.

Twelve-month CPI inflation rose from 3.1 per cent in September to 5.1 per cent in November. Bank staff expect inflation to remain around 5 per cent through most of the winter period, and to peak at around 6 per cent in April 2022, with that further increase accounted for predominantly by the lagged impact on utility bills of developments in wholesale gas prices. Indicators of cost and price pressures have remained at historically elevated levels recently, and contacts of the Bank’s Agents expect further price increases next year driven in large part by pay and energy costs. CPI inflation is still expected to fall back in the second half of next year.

Fibre2Fashion News Desk (RKS)



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