In the statement of BoE Chairman Andrew Bailey, available on the Bank’s website, it was noted that the Bank follows developments in the financial markets very closely in light of the significant repricing of financial assets.
Reminding that the British government made a series of important announcements in the past weeks, the statement said, “The Government’s Energy Price Guarantee (holding household energy bills fixed for 2 years) will reduce the short-term peak (expected peak level) in inflation.” it was said.
In the statement, which stated that the British government’s commitment to sustainable economic growth was welcomed, the following evaluations were included:
“The role of monetary policy is to ensure that demand does not overtake supply, leading to further inflation in the medium-term. As the Monetary Policy Committee has made clear before, the Committee will make a full assessment at its next scheduled meeting, the impact of the government’s statements on demand and inflation, and the decline in the pound sterling. In line with its mandate, the Monetary Policy Committee will not hesitate to adjust interest rates as necessary to return inflation to the 2 percent target in a sustainable manner over the medium term.”
STRONG FALL IN STERL
The British pound hit an all-time low of 1.0350 in Asian markets this morning.
British Finance Minister Kwasi Kwarteng said on Friday that the country is preparing for the implementation of tax cuts, which will amount to a total of 45 billion pounds. This situation increased the expectations that the country’s external debt would increase and caused the sterling to lose strength.
Analysts predict that the BoE will continue to increase interest rates in the coming period in order to control inflation.
The Bank of England raised the policy rate by 50 basis points to 2.25% last week.
Inflation in the country is currently at 9.9 percent, the highest level in the last 40 years.