Thursday, August 03, 2023

Bank of England Raises Rates To 5.25%

The Bank of England raised interest rates today by a quarter of a point to 5.25%, the highest level since 2008. The move was widely expected, as the Bank is under pressure to bring inflation under control.

Inflation in the UK is currently at a 40-year high of 7.9%. The Bank has been raising rates in an effort to cool the economy and bring inflation back down to its target of 2%.

The decision to raise rates will have a significant impact on borrowers. Mortgage rates are already at their highest level in years, and they are likely to go even higher. This will make it more expensive for people to buy homes and refinance their mortgages.

Savers, on the other hand, will benefit from the higher interest rates. They will earn more interest on their savings accounts and other deposits.

The Bank of England has said that it is prepared to raise rates further if necessary. It will be watching inflation closely in the coming months to see if it is starting to come down.

By happenstance the Bank of Brazil cut its benchmark interest rate by 50 basis points today, to 13.25%. This is the first rate cut in three years, and it comes as inflation in Brazil has begun to cool.

Inflation in Brazil was running at a 10-year high of 11.73% in June. However, it has since come down to 10.9% in July. The Bank is now confident that it will reach its target of 4% by the end of the year. The Bank of Brazil is hoping that by cutting rates, it can help to boost economic growth and further cool inflation.

The decision to cut rates was widely expected by economists. They had been forecasting a rate cut of either 25 or 50 basis points. The fact that the Bank of Brazil opted for a larger cut suggests that it is more confident that inflation is starting to come under control.

Brazil was among the first major economies to start increasing their interest rates. They are now the first to cut, it is a sign of things to come.

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