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Bank of England raises interest rates for 12th time in 2 years to tame inflation

Friday, 12 May 2023 10:49 AM [ Last Update: Friday, 12 May 2023 10:49 AM ]

British Pound Sterling banknotes are seen at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger

The BoE has again raised its benchmark interest rate by a quarter of a percentage point, which now stands at a 15 year record high of 4.5%.

Mere weeks after Andrew Bailey said the UK economy might have turned a corner; the Bank of England governor announced the following:

But let me be clear, inflation remains too high and it's our job to get it all the way down to the 2% target, and have it stay there.

And this is why today we've increased bank rate by naught point two five percentage points to four and a half percent.

Andrew Bailey, BoE Governor

The Bank of England says the aim is to curb rampant inflation that remains stubbornly in the double digits.

UK central bank raises interest rates for 12th time to tame inflation

The Bank of England has again raised its benchmark interest rate, sayng the aim is to curb rampant inflation.

The BoE has now raised interest rates multiple times, raising questions among economists, such as Professor Keith Pilbeam, regarding the efficacy of the move.

Well, today's interest rate rise is just another indication of the failure of the Bank of England to do its job earlier, had it raised interest rates well before it started raising them, and raised them more substantially, we probably wouldn't be headed to even higher rates down the road and, certainly, inflation would have been brought back under control.

Keith Pilbeam, Professor of Economics, City University, London

The rate rise will have consequences, economists say, for other sectors of the economy, such as the housing market where two and a half million Britons will soon have to renew their home loans at higher interest rates.

More than half of Britons are opposed to funding coronation of King Charles III by British taxpayers in face of the nation’s record-breaking inflation and cost-of-living crisis.

For months increases in wholesale energy prices, caused by self imposed sanctions over the war in Ukraine, were blamed for the unbridled inflation. Energy prices have since eased, but inflation hasn't.

What did Rishi Sunak do when he was Chancellor of the Exchequer? He borrowed well over 300 billion pounds, increasing the fiscal deficit to 15% of GDP.

How was that financed? It wasn't financed through tax rises; it wasn't financed through some sort of government cuts or anything like that.

It was financed purely by printing of money by the Bank of England, 300 billion in one go, raising the UK money supply from 600 billion to 900 billion in the space of one year.

Keith Pilbeam, Professor of Economics, City University, London

UK's supermarket shelves have been left bare of fresh fruit and vegetables, particularly tomatoes and cucumbers, which could be the “tip of the iceberg”, the National Farmers’ Union (NFU) has warned.

UK’s fruit and vegetable shortage could be ‘tip of iceberg’, farming union warns

Supermarket shelves have been left bare of some fresh fruit and vegetables, particularly tomatoes and cucumbers, in the UK, which could be the “tip of the iceberg”, the National Farmers’ Union (NFU) says.

Rapidly rising inflation has seen grocery prices shoot up by up to 20%, the demand for food banks double compared to five years ago, and, months of public sector strikes for pay rises.

This is the 12th consecutive interest rate rise in less than two years, with the Bank of England leaving the door open for more hikes in the coming months. The question now is when will the bank hit the pause button?