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Interest Rate to rise To 4.25% in UK In March 2023

UK To Increase Interest Rate To 4.25% In March 2023


Interest Rate to rise To 4.25% in UK In March 2023

buayaberdiri.blogspot.com - On March 22, 2023, the Bank of England's Monetary Policy Committee (MPC) held a meeting to set monetary policy that aims to meet the 2% inflation target and sustain growth and employment. Following a vote, the committee decided by a majority of 7-2 to increase the Bank Rate by 0.25 percentage points to 4.25%. Two members preferred to keep the rate at 4%.

Compared to the February Monetary Policy Report, global growth is projected to be stronger, while core consumer price inflation in advanced economies remains elevated. Wholesale gas futures and oil prices have dropped materially. There have been large and volatile movements in global financial markets, reflecting concerns about the possible broader impact of events such as Silicon Valley Bank's failure and UBS's acquisition of Credit Suisse. Government bond yields are broadly unchanged, and risky asset prices are somewhat lower compared to the previous meeting.

The Bank of England's Financial Policy Committee (FPC) provided the MPC with an update on recent global banking sector developments, stating that the UK banking system has robust capital and liquidity positions and remains resilient. Bank wholesale funding costs have increased in the United Kingdom and other advanced economies, which the MPC will continue to monitor to understand the effect on credit conditions faced by households and businesses.

In the Spring Budget, additional fiscal support was announced. The Bank staff has provisionally estimated that this could increase GDP by around 0.3% compared to the February Report. A full assessment will be conducted ahead of the May Monetary Policy Report to evaluate the measures' effects on supply and demand in the medium term.

While GDP was expected to be broadly flat around the turn of the year, it is now expected to increase slightly in the second quarter, reflecting the tightness of the labor market and stronger-than-expected employment growth. CPI inflation has fluctuated, falling from 10.5% in December to 10.1% in January and then rising to 10.4% in February, 0.6 percentage points higher than expected. Services CPI inflation was 6.6% in February, weaker than the February Report's expectation, but food and core goods price inflation has been stronger than projected.

The MPC's primary focus is price stability, and inflation is expected to return sustainably to the 2% target in the medium term. The MPC has voted to increase Bank Rate by 0.25 percentage points, given the unexpected increase in CPI inflation. The tightness of labor market conditions and the behavior of wage growth and services inflation will be monitored closely. The MPC will adjust the Bank Rate as needed to return inflation to the 2% target.






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Jamal Sunday, March 26, 2023 Tags: financial, news