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

Car Finance for Second-Hand Vehicles: What Are Your...

January 8, 2025

Jeremy Hunt Proposes Pension Fund Overhaul to Boost...

March 4, 2024

SMEs bring forward finance plans in order to...

August 8, 2022

How to repurpose your website to accommodate special...

December 29, 2022

Growing a Faceless Video Channel on Instagram: How...

August 12, 2024

Airbnb to target single-room listings as cost of...

May 4, 2023

Twitter traffic sinks in wake of changes and...

July 10, 2023

Getting to Know You — Dr. Amy MacIntyre,...

October 25, 2022

Saudi Arabia Attracts British Lawyers with Lavish Perks...

June 16, 2024

Is It Legal To Invest SSAS Pension in...

January 16, 2025

    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

    • Trump warns of ‘serious consequences’ if Elon Musk funds Democrats

      June 7, 2025
    • Musk jokes about reconsidering stance on Big Beautiful Bill after Schiff’s praise

      June 7, 2025
    • Musk deletes explosive posts about Trump and Epstein files

      June 7, 2025
    • House witness flips script on Dem who ambushed him during hearing with unearthed tweet: ‘Iceberg is ahead’

      June 7, 2025
    • Call with China’s Xi, and Trump-Musk exchange fueled barbs during 20th week in office

      June 7, 2025
    • Trump’s conservative allies warn Congress faces critical ‘test’ with $9.4B spending cut proposal

      June 7, 2025

    Categories

    • Business (8,152)
    • Investing (2,019)
    • Politics (15,568)
    • Stocks (3,136)
    • 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