The Bank of England has just officially raised interest rates by 50 basis points, the most in 27 years. The pound immediately fell against the US dollar and the price of Bitcoin fell 2 percent in the last 24 hours against the currency fiat that. It is predicted that Britain will also enter the brink of recession.
The Bank of England raised interest rates by 50 basis points on Thursday (April 8, 2022). It was the biggest single increase since 1995. The central bank had projected the arrival of Britain’s longest recession since the global financial crisis.
The sixth consecutive increase brought borrowing costs to 1.75 percent and marked the first half-point increase since the bank became independent from the British government in 1997.
The Bank of England’s Monetary Policy Committee voted by an 8 to 1 majority to raise interest rates. Because inflation in the UK and the rest of Europe spiked in May 2022.
“This largely reflects the almost doubling of wholesale gas prices since May, due to restrictions on Russian gas supplies to Europe and the risk of further restrictions,” the committee said in a statement. CNBC.
According to them, interest rates can affect energy prices at the retail level. This would worsen the decline in real incomes of British households and further increase inflation in the short term.
Britain’s energy regulator Ofgem has increased the energy price cap by 54 per cent since April to accommodate the huge costs, but it is expected to rise further in October, with annual household energy costs predicted to top £3,600.
The Bank of England now expects headline inflation to peak at 13.3 percent in October and remain high for most of 2023, before falling to its 2 percent target in 2025.
The pound against the US dollar fell immediately after the announcement, down more than 0.5 percent to around US$1,209.
Interest rates rise, Bitcoin prices fall against the pound
The crypto market also seems to be reacting to the central bank’s move, with Bitcoin further experiencing Bitcoin. Against the pound, BTC is trading in a range tonight £18,862.33, down 2.24 percent in the last 24 hours. Meanwhile, ETH and BNB are in a range of £1,328.81 and £251.43 respectively.
The crypto market and the capital market have been really shaken since the end of 2021 due to the policy of raising interest rates by a number of central banks, especially the Fed since the beginning of 2022. Low interest rates are the best hope for this new asset class to rise even higher. [ps]