The Bank of England is poised to unveil the biggest hike in interest rates for 33 years next week as the central bank continues its efforts to tame inflation. The key Monetary Policy Committee (MPC) meeting comes amid warnings that spending cuts and tax hikes under new Prime Minister Rishi Sunak could lead to a deeper and more enduring recession.
Most economists think that the MPC is likely to rise interest rates by 0.75 percentage points to 3% at the meeting on Thursday November 3. It will be the eighth consecutive jump in interest rates by the Bank but will represent the biggest increase since 1989.
Earlier this month, markets had predicted the interest rate increase could be as much as one percentage point but sentiment has calmed somewhat after the change of Chancellor and Prime Minister and Bank of England bond purchases pushed down on the cost of borrowing. Markets have also witnessed a decreased appetite for large hikes globally, with the Bank of Canada increasing its interest rate by 0.5 percentage points, below the 0.75 percentage point rise which had been widely predicted.
