KPMG comments on today’s interest rate decision

“The Bank of England increases firepower despite downside risks” says Yael Selfin, Chief Economist at KPMG UK."

The Bank of England increases firepower despite downside risks” says Yael Selfin.

The Bank of England increases firepower despite downside risks” says Yael Selfin, Chief Economist at KPMG UK.

“The MPC chose to hit the brakes with a 0.5 percent interest rate increase in the hope of chasing away a more persistent rise in inflation expectations. This is the first hike of this scale since 1995 and the first one since the Bank of England’s independence.

 “Although the Bank’s latest forecasts show inflation undershooting the 2 percent target at the relevant policy horizon of three years, today’s move will be seen as a message to the financial markets that the Bank does not wish to take any chances.

 “We expect two further hikes this year, in September and November, bringing the policy rate towards its equilibrium level of 2-3 percent.

“The publication of the Bank’s long-awaited strategy for reducing its balance sheet from the current level will be welcomed by the markets, as it provides clarity on its intention to reduce the stock of gilts by £80 billion over the first year.”

-Ends-

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Notes to Editors:

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff.  The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

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