At its meeting this week, the Bank of England may make the biggest rate hike in 33 years to rein in high inflation.
Central Bank officials are facing pressure to accelerate interest rate hikes, as inflation in the UK is about five times higher than the bank’s 2 percent target. The steps to be taken by the new Prime Minister Liz Truss to protect households from rising energy costs are expected to soften the slowdown in the economy.
“The argument that a 75 basis point rate hike instead of 50 seems more convincing,” said Paul Hollingsworth, Chief European Economist at BNP Paribas.
The majority of 47 economists surveyed by Bloomberg expect an increase of 50 basis points. In August, the bank made the biggest rate hike since 1995, with 50 basis points. A 75 basis point rate hike would be the highest rate hike since 1989. While inflation is expected to rise further in the country, companies also have difficulty filling open positions. At the same time, rising living costs create a pessimistic picture.
The interest rate decision, which was postponed for a week after the death of Queen Elizabeth II, will be announced on Thursday.