AVN 67.73 Decreased By ▼ -0.75 (-1.1%)
BAFL 30.90 Decreased By ▼ -0.10 (-0.32%)
BOP 4.84 Decreased By ▼ -0.07 (-1.43%)
CNERGY 3.76 Increased By ▲ 0.01 (0.27%)
DFML 14.12 Decreased By ▼ -0.11 (-0.77%)
DGKC 41.00 Decreased By ▼ -0.64 (-1.54%)
EPCL 47.03 Increased By ▲ 1.66 (3.66%)
FCCL 11.50 Decreased By ▼ -0.21 (-1.79%)
FFL 5.10 No Change ▼ 0.00 (0%)
FLYNG 5.94 Increased By ▲ 0.09 (1.54%)
GGL 10.92 Increased By ▲ 0.51 (4.9%)
HUBC 67.80 Decreased By ▼ -0.70 (-1.02%)
HUMNL 5.70 Decreased By ▼ -0.05 (-0.87%)
KAPCO 28.00 Decreased By ▼ -0.22 (-0.78%)
KEL 2.26 No Change ▼ 0.00 (0%)
LOTCHEM 26.15 Increased By ▲ 1.05 (4.18%)
MLCF 21.38 Decreased By ▼ -0.20 (-0.93%)
NETSOL 86.70 Decreased By ▼ -1.65 (-1.87%)
OGDC 98.60 Decreased By ▼ -0.70 (-0.7%)
PAEL 10.94 Decreased By ▼ -0.17 (-1.53%)
PIBTL 4.20 Decreased By ▼ -0.03 (-0.71%)
PPL 79.21 Decreased By ▼ -3.24 (-3.93%)
PRL 13.33 Decreased By ▼ -0.01 (-0.07%)
SILK 0.89 Decreased By ▼ -0.01 (-1.11%)
SNGP 43.17 Decreased By ▼ -1.21 (-2.73%)
TELE 6.08 Decreased By ▼ -0.10 (-1.62%)
TPLP 15.77 Decreased By ▼ -0.04 (-0.25%)
TRG 120.65 Increased By ▲ 0.90 (0.75%)
UNITY 14.06 Decreased By ▼ -0.04 (-0.28%)
WTL 1.32 Increased By ▲ 0.06 (4.76%)
BR100 4,160 Decreased By -11.3 (-0.27%)
BR30 15,132 Decreased By -121.9 (-0.8%)
KSE100 41,617 Increased By 94.1 (0.23%)
KSE30 15,702 Increased By 39.5 (0.25%)
Follow us

LONDON: The Bank of England faces another big interest rate hike later Thursday to fight soaring inflation, even if it worsens a cost-of-living crisis that the UK government is seeking to contain.

The British central bank will announce its latest decision at 1100 GMT after a meeting that had been postponed from last week following the death of Queen Elizabeth II.

Most economists forecast policymakers to lift the BoE’s key rate by 0.50 percentage points to 2.25 percent, repeating its August increase that had been the biggest rise since 1995.

Some commentators even predict the BoE could mirror the European Central Bank and the US Federal Reserve and spring a jumbo hike of 0.75 percentage points – which would be the BoE’s largest in three decades.

The world’s major central banks are rushing to ramp up borrowing costs to dampen red-hot global consumer prices, which have galloped to their highest levels in decades on rampant energy and food prices in the wake of Russia’s war on Ukraine.

Rising rates have fanned recession fears because they push up loan repayments for consumers and companies alike, thereby exacerbating the UK’s cost-of-living crisis.

The Fed on Wednesday unveiled a 0.75-percentage-point increase, its third straight jumbo hike, one day after Sweden’s Riksbank shocked markets with a jump of a full percentage point.

Finely balanced

“We think (the) Bank of England decision is a finely balanced one, but find the arguments for a 75-basis-point move more compelling than those for a 50-basis-point increase,” said BNP Paribas economist Paul Hollingsworth.

“The key development since the last meeting is the unveiling of new Prime Minister Liz Truss’s fiscal package, which is likely to lower inflation considerably in the short term, but boost it in the medium term.”

UK inflation eases from 40-year high

Truss on Wednesday launched a six-month plan, starting in October, to pay about half of energy bills for businesses, charities, hospitals and schools, as she sought to soften the economic blow of sky-high prices.

The premier had already announced plans for a two-year energy price freeze for cash-strapped households.

Finance minister Kwasi Kwarteng will unveil Friday a mini-budget of tax cuts designed to boost economic activity, and will also outline the vast cost of the energy assistance.

Yet the package threatens to ultimately push inflation higher as a result of strengthening demand, according to US bank Citi.

“While the capping of energy prices is disinflationary in the first instance, we continue to see many of these measures as boosting demand and increasing the risk of more embedded inflation,” wrote Citi analysts in a research note.

Commentators also warn the measures will ravage public finances that are already reeling from huge spending during the deadly Covid pandemic.

Barclays bank analysts estimate that the government’s total cost-of-living expenditure could reach a colossal £235 billion ($267 billion).

Sky-high inflation is meanwhile crippling economic activity and threatens to plunge Britain into recession later this year, the BoE itself had forecast in August.

UK inflation eased in August to 9.9 percent after striking a 40-year peak of 10.1 percent in July but remains elevated, with the BoE predicting 13 percent later this year.

The current rate is almost five times the BoE’s target of 2.0 percent.

The bank earlier this month defended itself against accusations of being too slow to tackle sky-high inflation, after Truss proposed to review its operational independence.

Governor Andrew Bailey has expressed confidence in bringing down inflation, arguing that Britain was “heavily exposed” to surging gas prices after key supplier Russia invaded neighbouring Ukraine.

Comments

Comments are closed.

Inflation-fighting BoE readies another big rate hike

PL on POL products target: IMF-govt talks hamstrung by disconnect

ECP should announce election schedule for KP, Punjab: President Alvi

Children pulled from rubble as Turkiye -Syria quake toll tops 9,500

LHC suspends ECP's order de-notifying 43 PTI MNAs

FY24 budget: FBR invites proposals on income tax

AIIB chief economist briefed about state of economy

Sri Lanka bankruptcy to last until 2026: president

12 TTP terrorists killed in KPK’s Lakki Marwat: ISPR

Dar inducts four new members into ‘RRMC’

Reason behind cut in PSDP disbursement identified