On the 23rd March the Bank of England raised the interest rate from 4% to 4.25%, after inflation jumped to 10.4%.
Andrew Bailey said “inflation is still too high, but we continue to expect it to fall sharply from the middle of this year. Raising interest rates is the best way we have of making sure that happens”
The Bank of England’s focus is to have 2% inflation along with low unemployment. in order for inflation to reach 2% it may be that we can expect a further rate hike in the future depending on whether or not the BOE feels the process of disinflation is underway. The effect of interest rates can be felt when borrowing money the interest paid on these loans can be significantly higher than that of less than a year ago.
In the minutes of the Monetary policy committee meeting the tightness of financial conditions due to the recent failures of a couple or large banks including Silicon Valley Bank. There was also mention of the economy expecting to avoid recession despite the 0.4% anticipated decline in February report.