Following the passing of Queen Elizabeth II, the Bank of England postponed a crucial interest rate decision.
It stated that “given the period of national grief,” the Monetary Policy Committee’s conclusion would now be announced on September 22 at noon.
As a result of the death of Britain’s longest-reigning monarch, various public bodies have changed their plans for the following week.
It was widely anticipated that the Bank will raise rates on Thursday.
Economists had predicted that the central bank of the United Kingdom will raise interest rates to 2.25 percent, the highest level since December 2008.
To curb skyrocketing prices, the Bank hiked interest rates by the largest margin in 27 years last month. In addition, the report anticipated that the British economy would enter a recession later this year.
Higher interest rates might make borrowing more expensive, resulting in less disposable income and a slower price increase. However, others have questioned the effectiveness of UK rate hikes in the face of global inflationary pressures.
When the lockdown was lifted and the economy began to return to normal, energy prices soared. They have escalated further as a result of Russia’s drastic reduction of natural gas exports to Europe. It has pushed up gas prices across the continent, especially in the United Kingdom, which has had a significant impact on consumers.
Andrew Bailey, governor of the Bank of England, defended the institution’s track record before the Treasury Committee earlier this week: “Vladimir Putin, not the Monetary Policy Committee, will push the United Kingdom into recession.”
He added that the Bank would “take into account” the Prime Minister’s energy plan announcement when determining the next interest rate.
Ms. Truss criticized the Bank of England during her campaign, accusing it of being slow to respond to rising prices and safeguard vulnerable households.
However, the new Chancellor, Kwasi Kwarteng, has reaffirmed his “complete support for the independent Bank of England and their duty to manage inflation, which is crucial to addressing difficulties associated with the cost of living.”
In addition, he stated that he and Mr. Bailey would now meet twice each week to discuss the rising expense of living.
Inflation currently stands at 10.1%, the highest level in forty years.
To prevent widespread hardship, the prime minister stated on Thursday that the government will limit energy bill increases for all households for the next two years.
Until 2024, the average annual home energy bill will be capped at £2,500.
Analysts estimate that the massive aid plan might cost up to $150 billion, but while unveiling it, Ms. Truss stated that “extraordinary circumstances call for extraordinary measures.”
In a “fiscal event” at the end of the month, the chancellor will describe the level of borrowing required and any additional tax measures he thinks necessary to fund the support package.
