The Bank of England is set to raise the benchmark interest rate by 25 basis points on Thursday given the persistently high inflation and the tight labor market conditions. <\/p>\n
The UK central bank is anticipated to maintain its data-dependent guidance, while markets<\/span> are divided over the need for further tightening. <\/p>\n Some policymakers had sounded hawkish due to concerns over the wage-price spiral. But there is a risk of further tightening triggering a downturn in the economy<\/span>.<\/p>\n The nine-member Monetary Policy Committee is likely to opt for a 25 basis point increase in a split vote of 7-2. The announcement is due on May 11 at 07:00 AM ET.<\/p>\n The BoE has raised its benchmark rates at every rate-setting session since December 2021. A cumulative 415 basis point increase over the past eleven consecutive meetings have taken the interest rate to the highest since 2008. <\/p>\n BoE’s peers, the US Federal Reserve and the European Central Bank, had delivered 25 basis points increases in their latest rate-setting sessions.<\/p>\n Earlier this month, the US Fed had lifted the target range for the federal funds rate to 5.00 to 5.25 percent, making the tenth straight increase.<\/p>\n The ECB had softened its tightening cycle in April. The refi rate was lifted by a quarter-point after a half-a-point hike in March. <\/p>\n The BoE is also set to publish its quarterly monetary policy report that highlights the economic outlook and inflation projections.<\/p>\n The bank is forecast to upgrade its economic forecast. <\/p>\n The UK economy had performed stronger than expected in the first quarter and avoided a recession. Nonetheless, gross domestic product had stagnated as widespread strikes dampened services output. <\/p>\n The International Monetary Fund projected the UK economy to shrink 0.3 percent this year before expanding 1.0 percent in 2024.<\/p>\n At 10.1 percent, British consumer price inflation had slowed in March from 10.4 percent in February. Yet, inflation remains stubbornly above 10.0 percent. <\/p>\n Official data showed that job vacancies continued to remain above 1 million in the first quarter and wage growth remained strong. <\/p>\n