interest rate raised
Bank of England warns of recession of the century
11/03/2022 2:28 p.m
The British central bank warns of a recession with a record duration. At the same time, it makes a jump in interest rates by 0.75 percentage points to 3.00 percent. It is the eighth rate hike since December 2021 and the highest increase in more than 30 years.
The Bank of England has warned of a record-length recession in Britain. As the central bank announced, the country could fall into a phase of eight consecutive quarters with a decline in economic output. That would be the longest recession since reliable records began around 100 years ago, the PA news agency reported.
In terms of severity, however, the decline in economic output would be less drastic than in the past. Accordingly, a decline of 2.9 percent in gross domestic product is expected. During the financial and economic crisis of 2008, British economic output fell by 6.4 percent. .
The central bank raised the key interest rate from 2.25 percent to 3 percent this Thursday – the biggest jump since 1989. It wants to bring the inflation rate under control, which the central bank estimates will peak at around 11 percent by the end of the year will reach.
The decision to raise interest rates was not unanimous. Seven members of the nine-member Monetary Policy Committee MPC voted in favor of this rate hike, one member voted for a rate hike of 0.25 percentage points and one representative for 0.50 percentage points.
Interest rate hikes also in Norway and USA
Meanwhile, the central bank in Norway also increased its key interest rate. It rises by 0.25 points to 2.5 percent, as the central bank announced. It was the fourth straight raise, but lower than the previous three. However, Norge Bank announced that it is likely planning another rate hike in December to fight inflation. At the same time, the economy is doing well and unemployment is at a record low.
On Wednesday, the US Federal Reserve also raised interest rates by a further 0.75 percentage points in the fight against stubbornly high inflation. The new interest rate margin there is now between 3.75 and 4.0 percent and thus at the highest level since January 2008. It was the sixth increase in the key interest rate this year and the fourth increase of 0.75 percentage points in a row.