The Bank of England will most likely unveil the biggest hike in interest rates for over three decades when its decision-makers meet on Thursday.<\/p>\n\n\n\n
The Monetary Policy Committee is expected to raise interest rates by 0.75 percentage points to 2.5%.<\/p>\n\n\n\n
It would be the UK’s highest interest rate since the financial crisis.<\/p>\n\n\n\n
The base rate was reduced from 3% to 2% in December 2008.<\/p>\n\n\n\n
It would also be the largest single rate increase since 1989.<\/p>\n\n\n\n
\u201cInvestors think the most likely outcome is that the MPC will increase the bank rate by 0.75 percentage points on Thursday,\u201d said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.<\/p>\n\n\n\n
However, he stated that economists anticipate a smaller increase, to 2.25% – the same 0.5 percentage point increase as the bank’s previous hike.<\/p>\n\n\n\n
\u201cFor a start, hawkish surprises from the MPC have been far less common than dovish ones over the last year,\u201d he said.<\/p>\n\n\n\n
\u201cIn addition, Governor Bailey openly referred to a 0.50 percentage point hike ahead of the August meeting but has not given markets a nudge to price in a 0.75 percentage point hike.<\/p>\n\n\n\n
\u201cWe think that the MPC still will deem a 0.50% increase to be consistent with its pledge to act \u2018forcefully\u2019 if it sees signs of more persistent inflationary pressures.\u201d<\/p>\n\n\n\n
ING economist James Smith said that the Bank of England would have to react to recent falls in the price of the pound.<\/p>\n\n\n\n
Sterling hit a new 37-year low against the dollar on Friday. <\/p>\n\n\n\n
\u201cThe Bank of England meeting is crucial,\u201d he said. <\/p>\n\n\n\n
\u201cIt will tell us not only how worried policymakers are about the slide in sterling and other UK markets, but also how the Government\u2019s decision to cap household\/business energy prices will translate into monetary policy.\u201d<\/p>\n\n","protected":false},"excerpt":{"rendered":"
The Bank of England will most likely unveil the biggest hike in interest rates for over three decades when its decision-makers meet on Thursday. The Monetary Policy Committee is expected … <\/p>\n