Bank of England Raises Interest Rate to 4.00%, Institutions Predict Multiple Hikes Next Year

The Bank of England has raised the benchmark interest rate by 25 basis points from 3.75% to 4.00%, marking the first increase since August 2023. This hike aligns with market expectations, primarily due to ongoing inflationary pressures. The year-on-year increase in the Consumer Price Index (CPI) rose from 3.1% in August to 3.5% in September. Analysts point out that this rate hike is precautionary; although the inflation rate exceeds the target level, it will take time to assess the strength of the second-round inflation effects. There is a divergence in market expectations regarding the future monetary policy path, with some institutions predicting multiple rate hikes next year, potentially raising the benchmark rate to over 4.50%, while most economists believe there will be one more hike next year before entering a wait-and-see period.