The US Federal Reserve yesterday announced its biggest interest rate rise in 22 years. Today, the Bank of England follows suit, raising rates at the fastest pace for a quarter of a century.
But the biggest question remains: how successful will these hikes be at tackling inflation?
The Bank’s Monetary Policy Committee has voted six to three to raise interest rates from 0.75 to one per cent. This incremental 0.25 per cent rise was broadly expected by economists – though there had been speculation in recent weeks that the Committee might move faster, after March’s headline inflation rate hit seven per cent. Notably, Committee members in the minority were calling for a bolder hike of 0.5 per cent.
But the most explosive update in the Bank’s report today isn’t its immediate plan for rates, but its long-term forecast for the economy. The BoE estimates that inflation hit 9.1
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