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UK: Bank of England to hike interest rates to 1.5% by the year-end

UK: Bank of England to hike interest rates to 1.5% by the year-end
UK: Bank of England to hike interest rates to 1.5% by the year-end

City traders have reportedly speculated that interest rates in Britain will reach their highest level since the financial crisis' immediate wake by the end of the year.

After hiking rates for the first time in almost three years in December, the Bank will reaffirm its rapid policy pivot to homing in on massive inflation during its rate-setting meeting this Thursday.

The boost this week will be the first time the Bank has raised rates in continuous sessions since 2004, kicking off a year of quick rate hikes to keep pace with the rising living costs.

Around one-third of investors believe the Bank of England will raise interest rates to 1.5% by the year-end, to its highest level since January of 2009.

As per Sanjay Raja, senior economist, Deutsche Bank, Threadneedle Street's policy shift from assisting the UK economy through the COVID-19 pandemic to cracking down on a deepening inflation problem indicates that the Bank is turning the page when it comes to ultra-stimulative initiatives.

According to the most recent data, inflation has never strayed further from the Bank's 2% target, reaching 5.4% in December, which is recorded as the highest rate in over three decades.

UK Inflation is likely to hit 7% in April, fueled by the energy regulator's decision to raise the limit on energy bills by up to 50%, prompting a rush of City analysts to forecast the Bank will take a firm hawkish stance this year.

To taper the world’s financial system off the flow of easy money released during the pandemic, the globe’s leading central banks are ready to undertake a quick round of raising rates and balance sheet shrinking.

Around its policymakers' discussion this week, the US Federal Reserve stated its intention to combat inflation, which is currently at 7% in the United States, the highest level since the 1980s.

Jerome Powell, Federal Chairman, has warned the financial sector to brace itself for a rate hike frenzy this year, beginning with the world's most powerful central bank's meet in March this year.

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Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for and a few other distinguished news platforms, pertaining to business and finance.