The Bank of England (BoE) raised its key rate on Thursday for the 11th consecutive time, focused like the Fed and the ECB before it on the inflation that is weighing down the economy rather than on the shocks in the banking sector.
The BoE tightened its rate by 0.25 percentage point to 4.25%, its highest since the end of 2008.
It chose a tightening of the same magnitude as the American Federal Reserve (Fed) the day before, while the Swiss National Bank (SNB) followed earlier the same day the path taken by the European Central Bank (ECB) the week before. last by opting for an increase of 0.50 points.
The BoE warns in the minutes of its meeting that if inflationary pressures persist, further tightening of monetary policy would be necessary, with the same cautious message as in February.
Inflation rebounded in the United Kingdom last month, 10.4% over one year, even if the BoE and the government expect it to base over the year due in particular to the fall in prices energy.
Ignited by the post-confinement recovery linked to Covid-19 and then by the Russian invasion of Ukraine, inflation is also fueled in the United Kingdom by a tight labor market, notes the BoE.
Rishi Sunak’s government presented a budget last week aimed at reviving the economy and helping households.
According to the first estimates of the BoE, these measures should increase GDP by 0.3% over the next few years.
It remains likely that GDP will be stable at the start of the year, but a slight increase in the second quarter is now anticipated, where a contraction was expected in our February report, details the BoE, whose complete economic forecasts will not be presented. only in May.
The BoE, which took part in the negotiations to allow the purchase for one pound of the British branch of the Californian Silicon Valley Bank (SVB) by HSBC, considers that the British banking system remains resilient.
There are still channels through which British economic conditions could be affected, particularly in the event of tensions on non-British banks, BoE Governor Andrew Bailey had warned the day before in a letter to a British parliamentary committee, after the takeover in the pain of Credit Suisse by UBS.
Around the world, rapid rate hikes have weighed on the value of assets held by certain banks, weakening those that suffered from excessive concentration on certain debt securities, as was the case for SVB.