Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Bank of England may be forced to raise interest rates to 4% in 2023

by August 24, 2022
August 24, 2022
Bank of England may be forced to raise interest rates to 4% in 2023

The Bank of England could be forced to raise interest rates to 4% from as early as next year to combat soaring inflation, despite the growing risk of recession amid the cost of living crisis.

City traders are betting the central bank will more than double the cost of borrowing from 1.75% in response to inflation at the highest levels for more than 40 years.

In a development that will heap renewed pressure on mortgage holders, the Bank’s key base rate is expected to reach 4% by May 2023, according to the path implied by financial markets.

The base rate is expected to finish the year above 3% and could peak at close to 4.1% in June 2023, based on interest-rate derivatives linked to the meeting dates of Threadneedle Street’s monetary policy committee. The Bank is then expected to cut rates close to 3.8% by the end of next year amid expectations of fading inflationary pressures and a lengthy recession.

The movements in financial markets come as mortgage lenders ramp up the rates they offer to borrowers. Figures from the data provider Moneyfacts showed the average new two-year fixed-rate mortgage rose above 4% for the first time since 2013 at the start of this month. Lenders set their rates based on the central bank base rate and financial market conditions, and in competition for business with other providers.

The expectations for a dramatic rise in borrowing costs comes with inflation above 10% for the first time since the 1980s. Some City economists are forecasting a peak above 18% next January, fuelled by a sharp increase in household energy bills expected in October and early next year.

The Bank raised rates by 0.5 percentage points this month, the biggest single rise in almost 30 years. Expectations for rates hitting 4% would probably require similar sharp increases in borrowing costs.

Threadneedle Street has a target, set by the government, to steer inflation towards 2%. It faced sharp criticism in the Conservative leadership race after Liz Truss said she could tweak its mandate to get inflation back under control.

On the path implied by financial markets, the Bank would raise the cost of borrowing by more than the US Federal Reserve, with traders betting interest rates would peak at close to 3.8% in March next year.

However, expectations for higher interest rates could be tempered by a sharper slowdown in the UK economy, amid early warning signs that Britain’s economy is heading for a lengthy recession.

Two separate snapshots of industrial activity published on Tuesday showed a decline in manufacturing activity, while there are concerns that soaring living costs will force households to cut back their spending to deal with higher energy bills.

Read more:
Bank of England may be forced to raise interest rates to 4% in 2023

0
FacebookTwitterGoogle +Pinterest
previous post
UK and Ukraine launch talks on digital trade agreement
next post
How To Find The Top Refurbished iPhone 11 Deals

You may also like

Getting to Know You: Dr. Jatin Patel, Physician...

January 18, 2023

Carmakers recover ground in first three month of...

April 28, 2023

Secrets of Success: Catherine Storey, CEO of Freshbat

August 1, 2024

The Business of Online Gaming: How Digital Gaming...

December 10, 2024

Why all B2B Businesses should embrace digital payments

September 13, 2024

From Keywords to Conversions: A Deep Dive into...

September 27, 2024

Significant action required to stabilise UK public finances,...

September 16, 2024

London student named Fintech scholarship winner

June 26, 2024

What Could VR Do For Casino Business

August 16, 2022

New Forrester Study Highlights Efficiency and Enhanced Employee...

December 6, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Elon Musk may speak to Trump aides in push to calm feud

      June 6, 2025
    • Everyone Talks About Leaving a Better Planet for Our Children: Why Don’t We Leave Better Children for Our Planet?

      June 6, 2025
    • MARK HALPERIN: Democrats try to construct a Frankenstein candidate while JD Vance gains momentum for 2028

      June 6, 2025
    • ‘Gone too far’: GOP lawmakers rally around Trump after Musk raises Epstein allegations

      June 6, 2025
    • Democrats begin to embrace Musk amid Trump spat after party railed against him as a ‘dictator’

      June 6, 2025
    • Trump administration defends US and Israeli sovereignty with new sanctions against four ICC judges

      June 5, 2025

    Categories

    • Business (8,149)
    • Investing (2,011)
    • Politics (15,544)
    • Stocks (3,130)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved