Regulation . 5 Aug 2022

Bank of England Hikes Interest Rates By 50-Basis Points

by Priyanshi Agarwal
Bank of England Hikes Interest Rates By 50-Basis Points
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UK’s financial regulator has increased the borrowing costs by 50 basis points for the first time since its independence in 1997.

This rate hike is the largest since 1995. The recent 50 basis point hike puts the current interest rate at 1.75% from 1.25%.

With this rate hike, the Bank of England (BoE) has joined a long list of Central banks that raised its interest rates this year to combat raging inflation.

The 50-basis point hike is foreseen and won't come as a surprise. However, if the BoE again goes for a rate hike late this year will surprise the markets. 

ftse-chart"Interest rates should have been hiked a long time ago, and the Bank of England has been too slow in this regard," Suella Braverman, an aide to Liz Truss, told sky news.

"Liz Truss has made apparent that she wants to analyse the mandate that the Bank of England has, so that's going to be examining in detail exactly what the Bank of England does and see whether it's suited for purpose in terms of its whole exclusionary independence over interest rates," told Braverman. 

Today, the British stock market opened flat after the central bank’s rate hike. The needs are down up 0.19% today. 

The Bank has struggled to combat rising inflation rates posted its independence in 1997. As the annual inflation rate is at a 40-year high of 9.4% and is predicted to rise further over the months ahead, more rate hikes can be expected.