Bank of England Raises Interest Rates to 1%, Warns of Recession

MAY 5 2022·Updated JAN 20 2023

Story

Image credit: EPA [via The Guardian]

The Facts

Amid warnings of a recession, the Bank of England (BoE) raised interest rates from 0.75% to 1% on Thu., marking their highest levels since 2009.
The Telegraph
The Monetary Policy Committee approved the 25-basis point increase by a majority of 6-3. The minority voters pushed for a higher increase of 50-basis points.
BBC News
This is the fourth consecutive increase since Dec. as the UK faces its highest inflation in 30 years.
BBC News
Surging prices are expected to continue, with household gas and electricity bills forecasted to increase by 40% in Oct. and inflation projected to hit 10% by the end of the year.
Guardian
Amid a cost of living crisis, the BoE governor defended the rise as the most effective solution to tackling increasing inflation.
Guardian

Sources Split

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CENTER

RIGHT

ESTAB
CRIT

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PRO
ESTAB

The Spin

Establishment-critical narrative

Just like the US Fed, bankers in the UK have acted too slowly to raise interest rates. The BoE is now forced to overcompensate with measures that fail to meaningfully reduce price hikes and run the risk of stagflation.

Spectator (UK)

Pro-establishment narrative

The BoE is in the tricky position of having to balance the need to control inflation against a desire to protect an increasingly fragile economy. To be overly aggressive could push the economy into a recession, but to do nothing could also be damaging. Following a policy of gradual increase walks down the middle, and will buy the BoE some time.

guardian

Narrative C

UK financers have acted with greater caution than Fed officials because, unlike the US' strong labor market and impending demand shock, consumer spending looks to be rapidly slowing in Britain. Developments overseas are chilling demand, and inflation is set to hit the UK later than other nations.