Bank raises interest rates to 5.0 percent
The Bank of England raised interest rates on Thursday by a quarter point to 5.0 percent, their highest level in 5 years, in order to restrain building inflationary pressures.
All 58 analysts polled by Reuters had predicted the hike the second this year which took borrowing costs to their highest since the September 11 attacks on the United States prompted the most aggressive round of global monetary easing in decades.
Policymakers are worried that inflation is already above the central bank's 2.0 percent target and could encourage workers to demand bigger wage rises in the New Year pay round.
Britain's housing market is also showing no sign of being tamed by August's quarter point rise. Prices rose by another 1.7 percent in October, according to the country's largest mortgage lender.
But economists are divided over whether the BoE will have to raise interest rates again early next year. Many say they will if they want to keep inflation down.
Others say that consumers already straining under a mountain of debt may find themselves increasingly stretched when pay packets fail to go up in line with the higher cost of living, which in turn would slow the economy.
- 1 Local private investors could miss an upturn
- 2 BoE expected to hold interest rates steady at 5 pct
- 3 Markets see ECB rates on hold through first half of yr
- 4 Fears of slowdown could veer China into trouble
- 5 BP Russian partners say row solved
- 6 U.S. corporates look to hedge as dollar rebounds
- 7 Utility windfall profits in tax spotlight
|
|
|
