Last week the Bank of England spooked investors as interest rates hiked higher than previously thought as they went up by half a percentage point to 5.%.
Bloomberg Economics has warned that the Bank of England will “push the UK into a recession this year” and that interest rates will top 6% by quarter four.
The analysts said the downturn is a direct result of the price of “taming an inflation rate” which is remaining “close to double digits.”
The money markets are almost fully pricing the Bank of England to push interest rates in December to 6.25%, analysts warned.
This will almost certainly see the economy see a “far worse slump” which will see interest rates hit a 25 year high.
Joe Nellis, a professor of global economy at Cranfield School of Management, warned, “The Bank of England is deploying shock and awe tactics in a bid to shake the economy out of its current state of inflation.
“Inflation is becoming embedded in the system with little sign of it subsiding. Unfortunately, further financial hardship is expected for many millions of households – and those at the lower end of the income scale with variable rate mortgages, or who are in the process of remortgaging, will be hit the hardest.”
LAst week the Bank of England has raised interest rates to 5% which is the highest in 15-years which will make borrowing more expensive.
Chieu Cao, CEO of Mintago, said last Friday, “It already felt like we were on the edge of a cliff when it comes to Britons’ financial wellbeing, but yesterday’s inflation and today’s base rate hike will push many people over the edge and onto the rocks below.
“Businesses need to be prepared – as much as their costs are rising as well, it’s their staff who are going to feel the harshest effects of high interest rates and the cost-of-living crisis. That’s why employees require considered, robust wellbeing support; support that is regrettably lacking among many employers at present.
“In truth, too many businesses still see financial wellbeing support as a ‘nice to have’, but it’s a necessity right now. Employers must recognise the detrimental impact that financial stress can have on employees’ productivity, mental health, and overall wellbeing, and provide them with the tools they need to manage their finances as effectively as possible.”