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The Bank of England (BOE) seems ready to raise interest rates at Thursday's meeting (5/5). If that happens, it would be the fourth increase in interest rates since December 2021, the fastest increase in borrowing costs in a quarter of a century.
This is done by the British central bank which is trying to quell the dangers of a spike in inflation. But the BoE must also tread carefully to avoid the UK economy from recession, even with inflation at 7%, more than three times the BOE's inflation target.
Last month, BOE Governor Andrew Bailey said he and his colleagues were walking a "very tight line" to steer the world's fifth-largest economy through a post-Covid-19 spike in global inflation exacerbated by Russia's invasion of Ukraine.
The day after the Federal Reserve raised its benchmark interest rate 50 bps, its biggest increase since 2000, to a range of 0.75% to 1.0%, the UK central bank is expected to announce a quarter point hike, bringing the Bank Rate to 1.0%.
It was the Fed's second increase in borrowing costs since the pandemic began. While the BoE's expected increase will be the fourth in a row and raise Bank Interest Rates to the highest level since 2009.
Investors on Wednesday priced in a less than one-in-three chance of a half-point hike from the Fed by the BoE.
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