The Bank of England (BoE) expects a “prolonged” recession and inflation “above 10%” in the short term, an economic forecast published this Thursday read, including an announcement of an interest rate hike. 75 basis points.
“The UK economy is expected to remain in recession through 2023 and into the first half of 2024, with GDP expected to recover only later”, reveals the Bank of England’s “Outlook”, led by Andrew Bailey.
Inflation is expected to rise to 11% in the fourth quarter of 2022, but the monetary authority expects inflation to slow significantly from 2023 onwards, although “inflationary pressures remain high” and it will reach its desired 2% between 2024 and 2025.
In terms of GDP, it will decline by around 0.75% in the second half of 2022 and fall through the first half of 2024, returning to 0.75% growth only in the fourth quarter of 2025.
“While there is currently considered a significant margin of excess demand, continued weakness in spending could lead to a growing economic slowdown in the first half of 2023, including a rise in unemployment,” the document said. The BoE predicts the unemployment rate will rise to 6.5% in the fourth quarter of 2025, the highest since the financial crisis.
Bank of England is high Prices this Thursday The interest rate hike of 75 basis points, the biggest hike in 33 years, puts key interest rates at 3%.
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