England postpones rate increase until after duel for Queen Elizabeth II

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  • The Bank of England is under pressure from the decisions of the Central Bank of Europe and the US FED, which raised the reference interest rate to record levels.
  • The manipulation of the rate is key for the monetary authorities because by raising it they attract money and, with that, prevent inflation from escalating.
  • As “collateral damage”, high rates lead to recession and job loss.

In a decision that was not in anyone’s plans, the Bank of England delayed the announcement on the benchmark interest rate in the UK until September 22.

The reason: to allow mourning after the death of Queen Elizabeth II.

The measure was going to be taken next week, days after the increase in interest rates decided on Thursday, September 8, by the European Central Bank and less than a month after the FED did the same in the United States.

The measure of the highest monetary authority in England is key to combat inflation in a country that is supporting rates above 10 percent per year.

As announced by the bank, this will give time to consider new data on inflation and employment, which will be released next week.

They also await government decisions on energy tariffs and potential subsidies for consumers, after the arrival of the new prime minister, Liz Truss, to replace Boris Johnson.

The interest rate must wait for the mourning for the death of Queen Elizabeth II to pass

Investors are divided on whether the Bank of England will raise its benchmark interest rate half point or three-quarter point.

Currently, the interest rate paid by banks is 1.75 percent.

In a minimum scenario, it would reach 2.25 percent, in the maximum, 2.50 percent, publishes Bloomberg.

With inflation at a four-decade high (10.1 percent in July), there is increasing pressure on formulators, and fears of a spiraling take hold.

Although the Truss government announced this Thursday a package of measures to try to prevent a sharp increase in gas and electricity services in homes, everyone believes that they will be insufficient to contain the increases in the short term, especially in food .

The causes of inflation are varied, but basically they are due to the monetary issue that governments made to face the pandemic and, more here in time, to the war conflict unleashed very inopportunely between Ukraine and Russia, which triggered the price of raw materials. and energy.

In this inflationary context, the British supermarkets Asda, Co-Op, Morrisons, Waitrose, Tesco Plc and Marks & Spencer Group announced that they are going to remove all or part of expiration dates on certain products to allow prices not to rise.

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