The Bank of England raises rates by 50 points in a highly divided decision

The Bank of England raises rates by 50 points in a highly divided decision

The Bank of England raises rates by 50 points in a highly divided decision

The United Kingdom’s monetary institution had already applied a rise of 50 basis points in August, the largest increase in 27 years, despite warning of the risks of recession, given inflation that is close to its highest level in the last 40 years.

The annual rate of consumer price inflation in the UK slowed in August from 10.1% in July to 9.9%, its first decline in almost a year, although it remains well above the target for the 2% set by the Bank of England and is the highest in the Group of Seven.

The decision went ahead by the minimum in the meeting of the Monetary Policy Committee (MPC, for its acronym in English) of the agency. The MPC voted 5-4 to raise rates to 2.25%, with Lieutenant Governor Dave Ramsden and outside members Jonathan Haskel and Catherine Mann favoring a rise to 2.5%, while the new MPC member Swati Dhingra wanted a smaller increase, up to 2%.

On the other hand, the institution has announced that it will sell around 8.7 billion pounds of government bonds in the last quarter of 2022, becoming the first major central bank to start active sales.

The MPC did vote unanimously to reduce its Β£838bn of government bond holdings by Β£100bn over the next year, in line with plans announced last month.

The reduction will be carried out through a combination of maturing ‘gilts’ (British Treasury securities) and ‘gilt’ auctions. There will be 15 auctions from October to the end of the year, with an expected volume of 580 million pounds each, of “gilts” with different maturities.

READ ALSO :   Apple is falling after Bank of America downgraded the iPhone maker on signs of a slowdown in consumer spending

Newsletter Updates

Enter your email address below to subscribe to our newsletter