…By Henry George for TDPel Media. Inflation in the UK remained high in March, hitting double digits and putting pressure on household budgets.
This could prompt the Bank of England to raise interest rates from the current rate of 4.25%, with market expectations suggesting rates could peak at either 4.75% or 5% this year.
This may lead to further pressure on borrowers.
The Bank of England’s role is to bring inflation back down to its 2% target, and the rising inflation rate could prompt another 0.25 percentage point increase in interest rates when the Monetary Policy Committee meets on Thursday.
Economists at Oxford Economics expect the bank rate to reach 4.5% after the Thursday meeting, with the labour market remaining tight and wage growth and services inflation stubbornly high.
Official figures revealed that earnings grew by 5.9% in March, but wage growth is still being cancelled out by rising costs.
Vacancies have dropped slightly but remain high due to the ongoing shortage of workers.
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Laith Khalaf, head of investment analysis at AJ Bell, said that inflation in the UK is not benign.
He also noted that the country’s headline inflation rate is around twice that of the US, which means that a rate hike from the Bank of England is expected at the policy meeting.
In stark contrast to the US, markets are also expecting another one or two rate hikes.
The Federal Reserve recently raised interest rates by 0.25 percentage points, while the European Central Bank pushed through a 0.25 percentage point increase.
However, the ECB has also left the door open for further increases.
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About the Author:
Henry George SNR holds a Masters degree in English Language. He is a passionate Digital Marketer using hand-on tools (Google Ads, Meta Business Manager, Meta Business Suites, WordPress, etc.) to communicate brands’ values and drive maximum Sales Qualified Leads. He lives in Wales, United Kingdom. He writes for TDPel Media on interesting event turnouts.
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