Bank of England hints economic pain felt by many to be a long, drawn-out affair | EdConwaySky
The Bank of England may have lifted interest rates by less than a lot of people had been expecting up until recently -- but for those with mortgages, the most striking thing from the trove of analysis they've published today isn't about today but about tomorrow.
Because there are heavy hints dropped throughout the Bank's Monetary Policy Report that it expects borrowing costs to stay high for a lot longer than many had anticipated.- the official borrowing level set at Threadneedle Street - would be down to 4% by 2024 and 3.7% by 2025. Far higher than the post-financial crisis period but a fall all the same.
Now, those same markets think rates will still be at 5.9% in 2024 and at 5% by 2025. And rather than challenging those assumptions, the Bank has come as close as possible to reinforcing them. This institution doesn't provide explicit guidance about where it's expecting interest rates to go; it prefers to drop hints. And the hint in the minutes alongside the decision today was about as heavy as you could get.
"The [Monetary Policy Committee] would ensure that Bank Rate was sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, in line with its remit."Why? Another clue is to be found elsewhere in the Bank's forecasts today. It's worth quoting at length:"Sharp increases in energy food and other import prices over the past two years have had second-round effects on domestic prices and wages.
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