Indicator – Economy – The Bank of England’s benchmark interest rate has reached its highest level in a decade and a half

The Bank of England confirmed in its quarterly fiscal policy report attached to Thursday’s announcement that it expects better-than-previous economic performance and no longer expects a downturn in the British economy this year, MTI reported.

The current rate hike was the 12th since the Bank of England began the current tightening cycle in December 2021, starting at a record low interest rate of 0.10%.

The prime rate of 4.50 percent, which was just reached, is about a decade and a half away.

The main driving force behind the series of interest rate increases is British inflation, at a pace not seen in four decades.

The annual inflation rate in Great Britain has exceeded ten percent every month since last September. In March it was 10.1 percent. Annual inflation faster than last October’s rate of 11.1 percent was measured 41 years ago, in October 1981.

The BoE’s inflation target is 2 per cent.

However, in its forecast on Thursday, the central bank made it likely that 12-month inflation rates will slow significantly from April, mainly due to lower energy prices.

According to the new forecasts, annual UK inflation will be around 5 per cent at the end of 2023 and return to the 2 per cent target in late 2024.

The Fiscal Policy Report projects moderate growth for the full year of 2023. The recent activity data received already indicates a strengthening performance of the British economy.

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