UK Expected to Raise Base Interest Rate by 0.25%P... Highest Rate in 13 Years

At the highest 1% level since February 2009

Boris Johnson, Prime Minister of the United Kingdom
Photo by Yonhap News

[Asia Economy Reporter Hyunju Lee] The Bank of England (BOE), the central bank of the United Kingdom, is expected to raise its benchmark interest rate by an additional 0.25 percentage points this month, Bloomberg reported on the 2nd (local time). If the rate hike is decided, it will be the fourth consecutive increase, bringing the rate to 1%, the highest level in 13 years since February 2009.

Bloomberg reported that market experts and investors expect the BOE to raise the benchmark interest rate by 0.25 percentage points at the Monetary Policy Committee meeting scheduled for the 5th.

Since the COVID-19 pandemic, the BOE lowered the benchmark interest rate twice in March 2020 to a record low of 0.1%. It then raised the rate by 0.15 percentage points in December last year, and by 0.25 percentage points each in February and March this year.

The BOE is also expected to clarify its stance on the sale of bonds purchased during quantitative easing (QE) at this meeting. In March, the BOE began reducing its balance sheet by not reinvesting ?28 billion (approximately 44 trillion KRW) of maturing government bonds. Bloomberg additionally explained that among major countries, none have yet sold government bonds purchased during quantitative easing since the 2008 global financial crisis.

Meanwhile, Bloomberg Economics estimated that the UK's inflation reached 9% last month and forecasted that the UK's GDP for the second quarter could also experience negative growth.

This content was produced with the assistance of AI translation services.