Global Central Bank Observation 丨 After a large interest rate hike 50 base points: the Bank of England warned the economic recession, Tellas or made interest rate hikes more "fierce"

The 21st Century Business Herald reporter He Liuying reported that after five consecutive interest rate hikes, the Bank of England finally "radical".

On August 4, local time, the Bank of England announced that the benchmark interest rate raised the benchmark interest rate from 1.25%to 1.75%, and increased interest rates to the highest point since January 2009. The 50 basis points also set the largest interest rate hike in the 27 years in the United Kingdom.

The chief economist of CITIC Securities clearly told the 21st Century Business Herald reporter, "The Bank of England's interest rate hikes are to control high inflation on the one hand, and on the other hand, to maintain the stability of exchange rates." The exchange rate has fallen by more than 10%. Generally speaking, interest rate hikes are conducive to the higher currency exchange rate. However, after the announcement of the interest rate resolution of the British Bank of England, a short -term diving against the US dollar against the US dollar, and then rebounded.

The market generally believes that this is caused by its economic prospects. At present, British inflation has a new historical high, with 9.4%in June, the highest level of forty years. Highly inflation has been superimposed with geopolitical conflicts, and the prospects of Britain's economic growth are not optimistic. According to the latest forecast value of the International Monetary Fund (IMF), the economic growth rate in the United Kingdom in 2022 will be 3.2%, and 2023 is only 0.5%.

As the "advanced troops" in the global interest rate hike wave, in December 2021, the Bank of England took the lead in responding to inflation and raised the benchmark interest rate to 0.25%. At that time, the British CPI value was 5.4%. Nowadays, the country's CPI has reached 9.4%. With the inflation level, how does the British Central Bank follow the pace of interest rate hikes?

The maximum rate hike in 27 years

On August 4, local time, the British Bank of England Bank (BOE) announced a rate hike of 50 basis points, raising the benchmark interest rate from 1.25%in June to 1.75%, setting the largest interest rate hike in the 27 years of the Bank of England.

The minutes of the meeting showed that eight members of the Central Bank Monetary Policy Committee voted to support interest rates to increase interest rates by 50 basis points, and 1 member believed that it should increase 25 basis points. According to the experts interviewed, the British Bank of Britain's interest rate hike was not only promoted by domestic inflation and high fever, but also affected by the peripheral environment.

"The main factor is that British inflation risks are high, which constitutes a lot of pressure on the financial level of residents. At the same time, the labor market is tight, (name) salary continues to increase, and it has also promoted inflation to a certain extent. In the future The possibility. In addition, the rapid interest rate hike rhythm of the United States, Canada and other countries also puts some pressure on the British monetary policy. "Obviously, it was reported to the 21st Century Business Herald reporter.

It is worth noting that since December last year, this is the sixth interest rate hike of the Bank of the British Bank, but it has been slightly advanced with 15 basis points and 25 basis points before. As a result, the Bank of England has recruited criticisms of "inflation out of control due to too slow action".

From the perspective of Pang Yan, chief economist and director of the research department of the Digang Federation of China, it seems that the Bank of England has slowly raised interest rates before, reflecting the dilemma of the United Kingdom. Try to reduce the needs of recession. "Today, inflation expectations have continued to rise, and other central banks such as the Federal Reserve have raised interest rates sharply. The United Kingdom eventually moved to 50 basis points in interest rate hikes, which can be regarded as a make up of measures."

After this historic interest rate hike, does it mean that the Bank of England will turn a strong eagle since then? Andrew Bailey emphasized that "50 basis points today do not mean that we are now on a predetermined road to raise interest rates for each meeting."

HUW PILL, chief economist of the British Central Bank, released the same signal in an interview with the media. After the Bank of England increased its bank interest rates by 50 basis points on Thursday, investors should not assume that the Bank of England will further increase interest rates in September.

From the perspective of interviewed experts, this will eventually depend on the movement and choice between the Bank of England's dual policy goals in stable growth and inflation. "This is also the most important problem that major central banks need to think and solve, that is, how to accurately judge the form and rhythm of the country's economy and the recovery of the world economy? How to correctly measure and estimate the amplitude and toughness of inflation? In front of the curve? "Pang Yan said.

CPI or over 13% in the fourth quarter

At the same time as a significant interest rate hike, the Bank of England also issued a warning of economic recession. It believes that under the pressure of inflation, the British economy will enter the recession in the fourth quarter, and it may last up to one year.

In this intensified energy crisis, many European countries, including Britain, were deeply accumulated, and energy prices soared, stimulating high fever and high fever. The latest data show that the British CPI in June rose 9.4%year -on -year, the highest level since the record in 1982. Since April, the country's inflation rate has stood at a historical high of more than 9%for three consecutive months.

What is worrying is that inflation has not yet been topped. The Bank of England predicts that the CPI in the fourth quarter of this year will be more than 13%, and it will remain at a high level in most of 2023. For British residents, energy bills have become a expenditure that cannot be underestimated. The latest forecast data from the research company Cornwall Insight shows that by January next year, the annual energy bill of British families will reach £ 3615 (about 29,585 yuan), which is higher than its previously expected £ 3363. Huw Pill said a few days ago that "determination" should be "determined" to return inflation to a level 2%. It can be seen that the current anti -inflation is still the main task of the British Bank. But not only inflation, there are many problems in front of the United Kingdom.

This includes the sluggish performance of the manufacturing industry. Data show that the PMI of the manufacturing industry in the UK in July was 52.1, which was a new low since June 2020; and the continuous depreciation of the currency. Short -term diving, once fell 100 points, and then rebounded. As of press time, the pound was reported to the US dollar 1.207, which has fallen by more than 10%since the beginning of the year.

Obviously, "Russia and Ukrainian crisis may continue to be slow, the supply chain interruption is slow, and the high inflation is expected to continue and interest rates up. This year, the British economic downside risk is greater, and the risk of recession next year will rise further."

Under multiple haze, the Bank of England is currently expected to increase by 3.5%in 2022, 1.5%in 2023, and -0.25%in 2024. In contrast, the latest forecast value of the International Monetary Fund (IMF) is lower. It is expected that the economic growth rate of the United Kingdom will be 3.2%in 2022, and 2023 will only be 0.5%. The group ranks "bottom".

Prime Minister's dispute will affect the subsequent interest rate hike path

When the British economy was "deep in water", it was also a key period for the two British prime ministers candidates -former Financial Secretary Rich Sunak and Foreign Minister Elizabeth Trasbas. How to protect people's livelihood and grow steadily have naturally become their must -have options for tickets.

At present, both of them have tax cuts. "Sunak previously stated that the current primary task is to suppress inflation, which will delay tax cuts, and will not alleviate the pressure of fiscal funds by borrowing in the future. The rise in prices has taken a temporary targeted tax reduction measures to alleviate the crisis of living costs of residents; Tillas stated that it should stimulate the economy with great tax reduction and fees, and will increase the leverage of the government. "Obviously, it was introduced.

It is worth noting that Sunak has recently announced a long -term tax cutting plan saying that it will reduce the basic income tax rate by 20%by 2030, which is the largest "betting" since the campaign. However, it is not as good as Tras' "tax cuts from the first day of governing."

A Tellas ally Krack said: "Elizabeth will reduce taxes within seven weeks instead of seven years ... people are facing the largest living cost crisis in decades, and the tax burden is at the highest level in 70 years."

In an interview with the 21st Century Business Herald reporter, the European Institute of Modern International Relations said that Sunak was a stable faction and advocated to control inflation before tax reduction. The tax reduction of up to £ 38 billion. "In the current economic situation, I think Sunak's approach will be more rational. Tellas's promise is likely to make the country's back more heavy."

As a result of the prime minister's campaign, it is expected to affect the subsequent interest rate hike path. A recent survey shows that eight of the nine economicists interviewed said that Sonak can better deal with economic problems than bikras, and Tellas's economic plan will promote inflation and promote the Bank of England to accelerate to accelerate. The pace of interest rate hikes.

However, the music also pointed out to reporters that all the sayings of the two are more to attract voters. The current commitment may not be true, "not to mention that some measures are actually not strong."

Obviously, both people currently support tax cuts, but there are differences in the scale of tax cuts and time, and tax cuts will push inflation level.

"I think the differences between the future monetary policy caused by the differentiation of the tax policy of the two may be more limited. It can pay more attention to the policy differences between candidates for energy, supply chain, and trade, because this may determine the future British inflation trend and the Bank of England. The key to the urgency of interest rate hikes. "Obviously.

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