Bank of England set to reveal if it will hike interest rates

The Bank of England will announce whether it will raise rates or decline requests for an increase for at least another month.

The central bank has come under increasing pressure to cool rising prices amid ongoing inflationary pressures, so some analysts have suggested that it may finally be time for a rate hike at their November 4th meeting.

Consumer price inflation slowed slightly over the past month, but at 3.1% it was still the second highest value the National Statistics Office has recorded since 2012.

Speculation about a possible rate hike continued to gain momentum after the Office for Budget Responsibility (OBR) released its latest forecast documents on Wednesday.

The OBR warned that inflation is likely to average around 4% in 2022 and possibly peak near 5%, suggesting the possibility that inflation could hit its highest level in 30 years.

After presenting the outlook, Chancellor Rishi Sunak stressed the potential impact of a rate hike, pointing out that even a one percentage point rate hike would cost the country £ 23 billion in payments on its mountain of debt.

At the last meeting of the Bank of England’s Monetary Policy Committee in late September, members’ appetites increased to pull on some fiscal levers.

Two policymakers, Deputy Governor Dave Ramsden and MPC external member Michael Saunders, in the face of inflation fears, called for a £ 35 billion cut in the bank’s £ 895 billion quantitative easing (QE) program, despite being outvoted 7-2.

However, all nine members ultimately voted to keep interest rates at 0.1%.

Analysts had broadly forecast a rate hike in December, but the latest OBR projections could accelerate central bank action.

Investec experts assume that the MPC will vote for a rate hike of 0.15 percentage points to 0.25% on Thursday.

“In the collective opinion of the MPC, we believe that inflation concerns will outweigh the downside risks of a possible spike in unemployment after the vacation regime ends,” Investec said.

It comes after a number of comments from MPC members who sounded increasingly concerned given the inflationary backdrop.

Michael Saunders said earlier this month that households should prepare for interest rate hikes “much earlier” than previously expected.

Invested added that the bank’s rate setters “almost certainly” will vote to end ongoing quantitative easing if interest rates are raised.

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