Markets expect 0.5 percentage-point rise for first time since independence as inflation rises
. Now the Bank of England must decide whether to follow suit and opt for a bigger than usual rise in official borrowing costs when it meets on Thursday.
After edging rates up by a quarter-point at a time, the financial markets are betting that Threadneedle Street’s monetary policy committee will announce a 0.5 percentage-point jump this time, something that has never happened since the Bank wasThe previous time interest rates were raised by such a margin, John Major was the prime minister, Ken Clarke was the chancellor and Eddie George was thegovernor. That was back in 1995, when the Treasury still had the final say over interest rates.
If the Bank does break new post-independence ground, it will not just be because the annual inflation rate is at aof 9.4% and expected to rise further over the months ahead. Nor will it be simply a matter of playing catch-up after repeatedly underestimating price pressures, even though that is a factor.
Others, including the housebuilder Taylor Wimpey, the bank HSBC and the energy company Shell, have announcedThe tightness of the labour market concerns the Bank, since it conjures up memories of the 1970s, when prices and wages chased each other higher until inflation reached a post-second world war peak of 25%.
Prof Stephen Millard, of the National Institute of Economic Research, argues interest rates need to go up from 1.25% to about 3% if inflation is to be brought back on track, but he thinks talk of a 1970s-style
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Commonwealth Bank is first major bank to lift interest rates, two days after RBA rates decisionAfter two days of silence, Commonwealth Bank has finally confirmed it will lift interest rates on its variable mortgages by 0.5 percentage points — in an uncharacteristically slow response to the Reserve Bank's rate hike on Tuesday.
Read more »
Reserve Bank of Australia hikes interest rates for a fourth consecutive monthThe Reserve Bank's relentless battle with inflation continues tonight, lifting the official interest rate for the fourth month in a row by half a per cent to a six-year high of 1.85 per cent. DETAILS: ashleywick9 9News
Read more »
Reserve Bank drains a witches’ brew of economic woes and orders another roundThe RBA is tightening monetary policy at the fastest rate since Silverchair broke in 1994. Tomorrow cannot come fast enough for the central bank.
Read more »
ANZ Bank readies subordinated debt dealAustralia and New Zealand Banking corporation is rounding up investors for a 10-year tier 2 debt wholesale subordinated deal.
Read more »
Reserve Bank lifts rates for historic fourth consecutive monthThe central bank has now raised the cash rate by 1.75 percentage points in four months, adding $770 a month to repayments on an $800,000 mortgage.
Read more »
Why this non-bank lender is bracing for a ‘shakeout’Now Finance boss Richard Blumberg says such institutions will hit distress as rates rise. He wants to capitalise on the drama.
Read more »