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BOE hiked interest rate with 25 bps with indications for more future hikes

11 May,2023
BOE hiked interest rate with 25 bps with indications for more future hikes

In an effort to slow down the high paced inflation, the Bank of England hiked its benchmark interest rate by 25 bps to 4.5% on Thursday. Governor Andrew Bailey said that the British central bank will "stay the course” till the inflation is tamed.

After making the biggest upgrade to its growth expectations since it started publishing forecasts in 1997, the BoE has stopped expecting a recession.

However, it now anticipates that inflation, which stayed above 10% in March, will decline more slowly than it had anticipated, primarily as a result of unforeseen, significant, and ongoing increases in food costs. Additionally, pay growth was stronger than anticipated.

According to a Reuters poll conducted last week, the majority of experts predicted that borrowing costs will increase for a 12th straight month in May, reaching their highest level since 2008, before going on hold.

But since markets have been anticipating future increases, they priced in a peak of over 5% this autumn not long after Thursday's announcement.

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