The inflation rate in Britain would be surpassed 7 percent as the interest rate has risen from 0.25 % to 0.5 %, which is the highest since three decades ago, according to the Bank of England (BoE) data provided on Friday, February 4, 2022.
While informing about the data, Ed Conway took to Twitter. He cited, “Bank of England informed that the UK households have to brace themselves for as the country will witness the biggest downfall in their living standard. Since comparable records have begun many years ago as the interest rate has increased to 0.5% and boost the inflation that would surpass the 7 percent and also slashes GDP forecast”.
He further asserted that the particular rise in the interest rate would also slash the forecast related to GDP (Gross Domestic Product).
Moreover, the government of the Central Bank of Britain (BoE) Andrew Bailey explained the situation and asserted the reason behind the rise in the interest rate even as households faced a serious squeeze and noted,” The reason is: if we don’t take this action, it will be even worse. It’s a complex message. I know it’s a stern message.”
The Bank of England has given the calculations and explained that real post-tax labour income – perhaps the best measure of living standards since it accounts for the rising tax burden and earnings and the inflation that could fall by 2% in the year 2022, which could be the biggest fall since the record began in 1990.
He further asserted that it would be worse than the post-financial crisis and also worse than it was on Black Wednesday 1992, which was also known as the biggest fall in the disposable incomes in records.
Moreover, the decision of increasing the inflation rate has been taken by the votes of the Monetary Policy Committee. The people in MPC have voted as 5-4 in favour of raising the rate from 0.25 perecnt to 0.5 percent. However, the four wanted to raise the rate to 0.75 percent. With the inflation, the household would have to maintain higher borrowing costs such as higher taxes, energy, goods and services prices.
The BoE further assumed that with the rise, the country would witness a peak of inflation as it could come at 7. 25 percent this spring.