By Indu Tyagi Ketan, 08 November, 2022
On Thursday, the Bank of England (BoE) announced the most significant hike in the interest rate and warned about the impending recession the country will face within the upcoming two years. With rising food and energy prices, the most recent rate increase reflects aggressive rate tightening by central banks worldwide.
“It is a tough road ahead”, BoE governor Andrew Bailey remarked during a press briefing. He continued, “it was lifting borrowing costs by 0.75 percentage points to three percent -- the highest level since the 2008 global financial crisis -- to cool UK inflation that it sees shortly peaking at a four-decade high near 11 percent”.
As a result of central bank rate hikes, retail lenders are raising interest rates on their loans, which is expected to deepen the cost-of-living problem millions of Britons are already experiencing.
Mortgage payments in the UK have increased recently due to the BoE’s emergency purchase of UK government bonds and the former British prime minister Liz Truss’ debt-fueled budget, which wasn’t received well by the markets and led to her resignation.
Prime Minister Rishi Sunak, her successor, has tried to cool the investors by suggesting tax increases in a new budget to be released on November 17, even though doing so would further hurt the British economy.
Early in 2020, when the Covid-19 outbreak started, the BoE cut its benchmark interest rate to a record-low 0.1 percent while simultaneously injecting enormous amounts of fresh money into the economy.
The Bank of England began raising interest rates in December 2021, and the increase on Thursday was the eighth consecutive one. The annual inflation rate in Britain is now 10.1%, the highest level in 40 years.
Due to this interest rate inflation, food, electricity, and other goods and services will all cost more. As a result, businesses will generate less money, wages will decrease, and the unemployment rate is expected to rise to 6.4% in the next five years.
Indu Tyagi Ketan
Chief Strategy Officer
Credit Suisse became worse from bad in late March of 2022, this resulted in the state-brokered takeover by the rival UBS. The 167-year-old bank’s customers rushed for the exits along with their money.
According to the bank’s latest report on the…
Microsoft has joined other big tech companies in turning to layoffs to overcome the more challenging times. It announced cutting over 10,000 jobs and posted on fiscal second quarter earnings exceeding the Wall Street estimate.
According to the…
Green Tech is the new normal as adopted by the world to save environment. The five most prepared countries to use and adapt to the frontier technologies which will help the green tech transition are Sweden, United States, Singapore, the Netherlands,…
After the collapse of Silicon Valley Bank and Signature Bank spread, the fear that other banks might also fall increased. It resulted in a run-on deposit mostly at the smaller banks.
Alphabet, the parent company of Google has incurred $2.6 billion in charges related to reductions in the workforce and office space in the first quarter of 2023.
The company, Alphabet also reported a revenue of $69.79 billion in the first quarter of…