In light of Queen Elizabeth II‘s passing, the Bank of England has decided to delay making a crucial decision about interest rates.
It stated that the Monetary Policy Committee’s conclusion would now be made public at noon on September 22 “in consideration of the period of national sorrow.”
Following the passing of Britain’s longest-reigning monarch, various public bodies changed their schedules for the upcoming week.
Rate increases by the Bank were generally anticipated for Thursday.
The central bank of the UK was expected to increase interest rates to 2.25%, the highest level since December 2008.
In an effort to rein in rising prices, the Bank hiked interest rates last month by the largest margin in 27 years. Additionally, it implied that the UK economy would experience a recession this year.
Borrowing money may become more expensive due to higher interest rates, which will reduce consumer spending and slow the rate of inflation. Some have questioned the effectiveness of UK rate increases in the face of inflation brought on by international problems.
When the lockdown was removed and the economy began to normalize, energy prices shot up. As a result of Russia drastically cutting its gas supplies to Europe, they have grown even more. Gas prices have increased across the continent, including in the UK, with significant negative spillover effects on consumers.
The governor of the Bank of England, Andrew Bailey, defended its record earlier this week while testifying before the Treasury Committee, saying that Vladimir Putin, not the MPC (Monetary Policy Committee), was responsible for the UK’s impending recession.
He added that when the Bank next decided on interest rates, it would “take into account” the announcement of Prime Minister Liz Truss’s energy plan.
Ms. Truss attacked the Bank of England throughout her campaign, saying it was taking too long to respond to price increases and defend vulnerable households.
However, Kwasi Kwarteng, the new chancellor, has reaffirmed his “complete support for the independent Bank of England and its duty to manage inflation, which is vital to combating cost of living concerns.”
Additionally, he stated that starting now, he and Mr. Bailey will meet twice weekly to talk about the rising expense of living.
With inflation reaching 10.1%, prices are rising at their quickest rate in forty years.
In an effort to prevent widespread hardship, the prime minister declared on Thursday that the government will restrict energy bill increases for all households for two years.
Up until 2024, the average annual home energy bill will be capped at £2,000.
Analysts estimate that the massive support program might cost up to £150 billion, but Ms. Truss said when she unveiled the programme that “exceptional circumstances call for extraordinary measures.”
By the end of the month, more information is anticipated as the chancellor is anticipated to present costings in a “fiscal event,” when he would describe the amount of borrowing required and any additional tax measures he believes are required to pay for the support package.