How high should Britain’s interest rates go?
Rules of thumb suggest rates are still too low. Forecasters disagree
RATE-SETTERS at the Bank of England had an easy job in the 18th century. For more than 100 years, from 1719 to 1821, the central bank’s policy rate was left undisturbed, at 5%. In June their rather more active successors set interest rates at the same point after 13 successive increases, designed to fight annual inflation which peaked at over 11% in October. The job is not yet done. Investors expect that on August 3rd the bank will again raise rates, to 5.25%, and will lift them by another half a percentage point by Christmas.
This article appeared in the Britain section of the print edition under the headline “Tinker, Taylor, soldier on”
From the July 29th 2023 edition
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