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UK residents, businesses face tough times over historical interest rates, inflation

  • Business

Residents and businesses in the United Kingdom have been told to brace for a rise in cost of living, as the Bank of England (BoE) expects the highest rate of inflation in the last 40 years.

The Bank of England told the public on Thursday that it forecasts inflation to hit 11 percent in the fourth quarter of 2022, pushing the financial regulator to raise interest rate.

As the historical inflation rate kicks in between October and December 2022, individuals, small businesses and corporate organisations will also battle with a 33-year high interest rate of 3 percent.

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The central bank moved the interest rate from 2.25 per cent to act against the soaring inflation. And according to the governor of BoE, Andrew Bailey, the change will have a real impact on people’s lives.

Despite the immediate impact it will have on households and businesses, Bailey said to avoid a worse situation, the bank is taking the drastic step.

“Quite simply we’re increasing bank rate because inflation is too high and it’s the bank’s job to bring it down.

“People should not have to worry about inflation as they go about their daily business, that’s why we’ve raised inflation as we did today.

“If we do not act forcefully now, things will be worse later on.” Bailey said, adding, “As the forecast shows it is a tough road ahead, with a sharp increase in energy prices caused by Russia’s invasion in Ukraine has made us poorer as a nation.”

Bailey also warned that the UK economy will be in recession for a prolonged period, as the apex bank projects a very challenging outlook

Source: Ripples Nigeria