Faisal Islam: How high will interest rates go?
Summary
The Bank of England raised its interest rate to 4% and signaled that further increases may follow. The article says markets may expect one more rise in February, but the outlook depends in part on the Iran war and its effects on inflation and the economy.Key Facts
- Three of the nine rate-setting committee members referred to more than one further increase.
- One committee member voted to raise the rate by half a percentage point, to 4.25%.
- Three members, including Governor Andrew Bailey, referred to one more increase.
- The Bank's forecast puts inflation just below 5% next spring.
- A typical household energy bill is forecast to rise by 27% in January, to £2,150 a year.
- The Bank's forecasts put UK economic growth at 0.6% and 0.5% in the first two quarters, and 0.7% in the third quarter.
- The article says oil prices used in the Bank's forecast averaged $108 a barrel, while the market price on the rate decision day was 13% lower.
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