European Central Banks Raise Interest Rates, UK Takes a Big Step
On the 22nd of June, central banks across European countries made a series of interest rate hikes. The most notable move came from the United Kingdom, which raised its benchmark interest rate by 0.5 percentage points, bringing it to 5% per annum. This is the highest level the UK has seen in 15 years.
Andrew Bailey, the governor of the Bank of England, issued a warning shortly after the monetary policy meeting, stating, “We are committed to getting inflation back to our 2% target, and we will take the necessary decisions to achieve that.” This suggests that further rate hikes may be on the horizon.
Initially, the financial market had predicted a 0.25 percentage point interest rate hike at this monetary policy meeting. However, it seems that the decision to take a “big step” was influenced by the higher-than-expected consumer price increase rate reported the previous day.
The UK’s consumer price index (CPI) for May, released on the 21st, stood at 8.7%, maintaining the same level as April. This figure exceeded expert forecasts (8.4%) and marked the fourth consecutive month of higher-than-expected inflation.
In addition to the UK, Switzerland and Norway also raised their key rates by 0.25 and 0.5 percentage points, respectively. Meanwhile, Turkey made a significant move by raising its benchmark interest rate by a staggering 6.5 percentage points to 15%.
Amidst these developments, Jerome Powell, the chairman of the US Federal Reserve System (Fed), attended a hearing on the US House Financial Services Committee on the 21st and predicted an additional rate hike.
The series of interest rate hikes by European central banks reflects their efforts to combat rising inflation and stabilize their respective economies. The UK’s bold move to raise rates to the highest level in 15 years demonstrates its commitment to tackling inflation and maintaining economic stability.
Source: VOA News
What factors influenced the UK’s decision to raise its benchmark interest rate by a substantial 0.5 percentage points?
European Central Banks Make Bold Moves as UK Takes a Giant Leap
Central banks across Europe made headlines on June 22nd as they embarked on a series of interest rate hikes. Among them, the United Kingdom stood out by raising its benchmark interest rate by a substantial 0.5 percentage points, hitting a 15-year high of 5% per annum.
Andrew Bailey, the governor of the Bank of England, wasted no time in issuing a warning after the monetary policy meeting. He emphasized the bank’s commitment to bringing inflation back to its 2% target and expressed their readiness to make necessary decisions to achieve that goal. This implies that we may see further rate hikes in the future.
Initially, the financial market had predicted a modest 0.25 percentage point increase at the meeting. However, the decision to take a courageous “big step” was largely influenced by the unexpectedly high consumer price increase rate reported just the day before.
On June 21st, the UK’s consumer price index (CPI) for May was released, revealing a stubborn 8.7% figure, matching April’s level. This surpassed expert forecasts of 8.4% and marked the fourth consecutive month of higher-than-expected inflation.
Apart from the UK, Switzerland and Norway also joined the interest rate hike trend, raising their key rates by 0.25 and 0.5 percentage points respectively. However, it was Turkey that made the most shocking move by increasing its benchmark interest rate by a staggering 6.5 percentage points to 15%.
Amidst these economic developments, Jerome Powell, the chairman of the US Federal Reserve System (Fed), attended a hearing on the US House Financial Services Committee on the 21st. During the hearing, he predicted an additional rate hike, echoing the sentiment of his European counterparts.
The simultaneous interest rate hikes by European central banks reflect their determination to combat rising inflation and stabilize their economies. However, it is the UK’s bold decision to raise rates to their highest level in 15 years that truly showcases their unwavering commitment to tackling inflation and maintaining economic stability.
Source: VOA News.
