Comment from the Fraser of Allander Institute on interest rate rise by the Bank of England

Mairi Spowage (Fraser of Allander Institute)

PROFESSOR Mairi Spowage, Director of the Fraser of Allander Institute at the University of Strathclyde, has commented on the latest interest rate rise by the Bank of England today (11 May) which takes the UK interest rate to 4.5%.

Professor Spowage said: “As expected, the Bank of England have raised interest rates for the 12th meeting in a row, taking the rate up to 4.5%. The Bank have done this to continue to bear down on stubbornly high inflation, which is still in double figures at 10.1%.

“The Bank’s outlook for the UK economy has improved considerably since their last set of forecasts were published in February. Broadly in line with the Office for Budget Responsibility, they now think that the UK economy will overall be flat in the first half of 2023 before returning to growth in the second half of the year. The Bank are forecasting 0.7% growth in 2023, followed by 0.8% growth in 2024.

“The Bank’s expectations are still for inflation to fall sharply from April, in part as the high price levels from a year ago come into the comparison. The next data are out on 24th May: let’s see if the economists are correct this time.”

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