Interest rate rise in midst of cost of living crisis will leave many incredulous
Summary
The Bank of England raised its interest rate by 0.25 percentage points to 4%, citing the risk that higher energy costs will spread through the economy and lift wages and inflation. The Office for Budget Responsibility expects weaker growth and lower inflation than the Bank, while reporting that businesses have seen profit margins fall and have little appetite for large wage rises.Key Facts
- The Bank of England increased its rate to 4%.
- The article says the rise followed a jump in oil and gas prices after war broke out in Iran.
- The Bank expects UK economic growth of 1.6% next year and inflation to reach 4.9%.
- The OBR forecasts 1% economic growth in 2027 and a peak in consumer price inflation of 3.75%.
- Official figures showed inflation at 3.5% in September.
- The OBR’s chief economist said average business profit margins had fallen from 13%–14% to 10%–11%.
- The Bank’s business survey and regional reports indicated that wage and price expectations had changed little since September.
- The article says vacancies are low and businesses have little need to hire more workers.
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