span>span>Thursday 3rd span>February/span> /span>span>2022/span>span> - 14:00 (GMT)/span>/span>
The Bank of England has voted unanimously to raise UK interest rates for the second time in three months. In a widely anticipated move, the central bank increased its base rate by 25bps to 0.5% in an attempt to help curb runaway inflation which is now predicted to reach 7% by April.
GBP immediately moved higher following the announcement as traders now expect at least two further rate increases over 2022. Key levels of resistance are set to be tested against both USD and EUR as positive GBP sentiment remains.
Bank of England Governor Andrew Bailey also confirmed that it will embark on quantitative tightening, with all members of the Monetary Policy Committee (MPC) in agreement to start the process of reducing the Bank’s £895bn quantitative-easing bond-buying programme.
It also reduced its growth outlook for the UK economy, with a slowdown in GDP to 1.25% over 2023 and just 1% in the general election year 2024. Rising energy bills and additional costs associated with both coronavirus and Brexit were cited as major contributors behind the moves.
Elsewhere, the European Central Bank decided to keep interest rates unchanged despite record inflation across the region. The central bank’s benchmark refinancing rate remains at 0%, the rate on its marginal lending facility sits at 0.25% and the rate on its deposit facility was kept at -0.5%.
