Bank of England Hikes Bank Rate to 0. 5%, Governor Andrew Bailey Hints at Wage Restraints.

05 Feb 2022, 08:00

Bank of England Hikes Bank Rate to 0.5%, Governor Andrew Bailey Hints at Wage Restraints The Bank of England (BOE) raised the country’s benchmark bank rate from 0.25% to 0.5% this week in order to curb rampant inflation. “We face a trade-off between strong inflation and weakening growth,” the British central bank’s governor Andrew Bailey told the press. Furthermore, when asked by a BBC reporter if BOE members were urging British citizens not to ask for pay raises, Bailey replied: “Broadly, yes.” BOE Raises Rates for the Second Time Since the Start of the Covid-19 Pandemic, British Central Bank Governor Says ‘We Need to See Restraint in Pay Bargaining’The Bank of England has raised the benchmark interest rate again after raising the rate back in December. BOE was the first major central bank to raise rates after the pandemic and on Thursday, the rate was bumped again from 0.25% to 0.5%. The British central bank’s move follows hawkish statements stemming from the U.S. Federal Reserve when it said it would raise rates “soon.” Fed chairman Jerome Powell signaled that the rates would likely be increased in mid-March 2022. Following the BOE’s Monetary Policy Committee meeting, the bank disclosed that four out of the nine committee members wanted to bump the rate to 0.75%. However, the majority of committee members, including governor Andrew Bailey, voted to increase the benchmark rate to 0.5% instead. After the increase, the British pound tapped a two-year high against the euro, and British government bonds were sold off during the afternoon trading sessions on Thursday.