11th Consecutive Increase as UK Avoids Technical Recession

  • BoE raises interest rates to 4.25%
  • 11th consecutive increase from the BoE
  • Unexpected rise in inflation last month
  • UK to avoid technical recession this year
  • Global financial market volatility impacting credit conditions
  • CPI inflation expected to remain unchanged near term, wage growth to fall more quickly
  • Bank Rate increases affecting domestic inflationary pressures

The Bank of England (BoE) has raised interest rates by 0.25% to 4.25%, the highest rate in almost 15 years, following an unexpected rise in inflation last month. This marks the 11th consecutive increase from the BoE and follows the jump in inflation to 10.4% during February, which was anticipated to fall further from January’s 10.1%. The BoE’s MPC voted by a majority of 7-2 to increase the rate, with two members preferring to maintain the current rate of 4%. The BoE revealed it expects the UK to avoid a technical recession this year, with GDP expected to ‘increase slightly’ in the second quarter compared with the 0.4% decline predicted last month. Meanwhile, it noted there had been ‘large and volatile moves’ across global financial markets, particularly following the fall of Silicon Valley Bank and ahead of UBS’s purchase of Credit Suisse. The MPC said it would ‘continue to monitor closely’ the effects on credit conditions faced by households and businesses and the impact on the macroeconomic and inflation outlook. Despite the rise in CPI inflation in February, the BoE said it is still expected to fall’significantly’ in 2023 Q2, to a lower rate than anticipated in the February report. This lower-than-expected rate is largely due to the near-term news in the budget including on the EPG, alongside the falls in wholesale energy prices. Meanwhile, the BoE said Services CPI inflation is expected to remain broadly unchanged in the near term, but wage growth is likely to fall back somewhat more quickly than projected in the February report. However, the BoE’s MPC said the extent to which domestic inflationary pressures ease will depend on ‘the evolution of the economy, including the impact of the significant increases in Bank Rate so far’. ‘The MPC will continue to monitor closely indications of persistent inflationary pressures, including the tightness of labour market conditions and the behaviour of wage growth and services inflation. If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required,’ it added.

Factuality Level: 10
Factuality Justification: The article provides accurate and objective information about the Bank of England’s decision to raise interest rates, the reasons behind it, and its expectations for the UK economy. It also includes relevant details about inflation, global financial market events, and the bank’s future monitoring plans.
Noise Level: 2
Noise Justification: The article provides relevant information about the Bank of England’s decision to raise interest rates and its impact on inflation and GDP. It also discusses the effects of global financial market events such as Silicon Valley Bank’s collapse and UBS’s acquisition of Credit Suisse. The article stays on topic and supports its claims with data, such as inflation rates and GDP predictions. However, it could provide more analysis or context about the long-term consequences of these decisions and actions.
Financial Relevance: Yes
Financial Markets Impacted: UK interest rates, global financial markets (impacted by Silicon Valley Bank’s fall and UBS’s purchase of Credit Suisse)
Financial Rating Justification: The article discusses the Bank of England raising interest rates, which directly affects financial markets and companies. It also mentions the impact of events like the fall of Silicon Valley Bank and the acquisition of Credit Suisse by UBS on global financial markets.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no mention of an extreme event in the text.

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