Displaying items by tag: Bank of England

The Bank of England has raised interest rates to 2.25%, the highest level for 14 years. This will make it more expensive to borrow, which should - theoretically - encourage people to borrow less and spend less. It should also spur people to save more. However, there is also a risk that it can drag on growth, harming the economy. The bank's monetary policy committee, which sets rates, believes that the economy is already shrinking, which would officially push the UK into recession. The Bank of England has also warned that the government’s energy price freeze will push up inflation in the medium term. With energy bills rising less sharply, households will have more money to spend on other goods and services (although some people are already having to skip meals due to rising bills).

The Bank of England has raised interest rates to 1.75%, the biggest rise in 25 years, as it predicts an even higher peak in inflation of 13%. It fears inflationary pressures are becoming ‘more persistent and broadening’. Many companies have been successfully raising prices which will push up consumer costs in the shops. The latest rise in gas prices has led to another significant deterioration in the financial outlook as the UK is now projected to enter recession. The bank has forecast that the UK economy will start shrinking in the fourth quarter of this year, and then keep contracting through next year. That would be the longest recession since after the 2008 financial crisis. The bank also points to the UK’s ‘tight’ labour market - a signal that it is worried about a wage-price spiral, as workers seek pay rises to help with the worst cost of living crisis in decades.

The Bank of England’s chief economist pledged to ‘deliver inflation back to its 2% target’ despite the challenges of rising food and energy costs and a fall in the pound’s value that has made both more expensive. The central bank’s single purpose at the moment is to bring down the rate of price growth - a clear hint that more interest rate rises are on the way. His comments follow an equally stark warning from a deputy governor of the Bank, who said its monetary policy committee (MPC) would ‘do whatever is necessary’ to prevent the rocketing cost of living from becoming a lasting inflation problem. The Bank has raised interest rates five times since December in response to soaring prices.

On 17 March Interest rates rose again for the third time in four months to counter higher prices and calm the rise in the cost of living. It means interest rates are now at their highest level since March 2020, when the Covid pandemic began. Energy bills and food costs are increasing and there is concern the war in Ukraine will push prices up further. Inflation, the rate at which prices rise, is currently 5.5%, well above the Bank of England's 2% target. The Bank expects inflation to reach 8%, possibly higher, in coming months, and cited rising prices and strong employment as the reasons for the latest rise. About two million households will see an immediate increase of about £26 a month to a typical tracker mortgage, and £16 to a typical standard variable rate mortgage.

The Bank of England's quarterly inflation report predicted modest growth in the coming months amid uncertainty over future relationships with Europe, global trade tensions, and worldwide growth slowdown since 2017. Economists are saying, ‘The bank has pulled into a lay-by, got out of the car, and is awaiting clearer indications of influences it cannot control’. Let us pray to the God who controls our destiny; Deuteronomy 28:12 says, ‘The Lord will open the heavens, the storehouse of his bounty, to send rain on your land in season and to bless all the work of your hands. You will lend to many nations but will borrow from none.’ On 1 November, may the UK enter a fruitful season of trade that is blessed by God and aligned to His purposes. Let us ask God to bless businesses with an inspired workforce who embrace opportunities with heaven’s wisdom, so that commerce and industry grow.