Bank of England’s Bailey warns UK faces ‘very big’ inflation shock defends historic rate hike


Summary : The BOE raised interest rates 50 basis points Thursday, taking borrowing costs to 1.75% in an ongoing bid to curb soaring inflation.

BOE Governor Andrew Bailey said that the risks of high inflation becoming persistent had risen since the Bank’s previous meeting in June, prompting it to take “stronger action.”

“We’re facing a very big shock to inflation,” Bailey told CNBC’s Joumanna Bercetche.

The BOE on Thursday raised interest rates by 50 basis points, taking borrowing costs to 1.75% in an ongoing bid to curb soaring inflation.

The BOE raised interest rates 50 basis points Thursday, taking borrowing costs to 1.75% in an ongoing bid to curb soaring inflation.

LONDON — The Bank of England on Thursday defended its decision to hike interest rates at the fastest clip in 27 years, saying the U.K. faces a “very big” shock to inflation.BOE Governor Andrew Bailey said that the risks of high inflation becoming persistent had risen since the Bank’s previous meeting in June, prompting it to take “stronger action.””We’re facing a very big shock to inflation,” Bailey told CNBC’s Joumanna Bercetche. “Our action today was very, very clearly [that] we feel we’ve got to take stronger action.”The BOE on Thursday raised interest rates by 50 basis points, taking borrowing costs to 1.75% in an ongoing bid to curb soaring inflation.It also issued a dire outlook for U.K. economic growth, predicting that the country will enter recession from the fourth quarter of 2022, with the downturn expected to last for five quarters.The central bank has faced criticism for not acting sooner and more aggressively to tackle runaway inflation. But Bailey insisted Thursday that many of the inflationary shocks facing the U.K. economy were external and unexpected — most notably Russia’s war in Ukraine and its detrimental impact on energy prices.”We don’t make policy with hindsight,” Bailey said. The war in Ukraine “is not something that was foreseen or frankly could be foreseen.”

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