Despite the uncertainty surrounding Brexit, this morning the Bank of England decided to raise UK base rates from 0.50% to 0.75%. This is the first time that the British central bank has put interest rates up to the last crisis level before the reduction in March 2009, when it dropped its base rate from 0.75% to 0.50%. There were no dissents.
The central bank premised its decision on the need to curb persistently high inflation, which has eaten away at British wages since the financial crisis. But with Brexit uncertainty dampening UK growth, this is sure to be a controversial decision, perhaps akin to the ECB's decision to raise rates in 2011 in the midst of a sovereign debt crisis. Some thoughts below
The urge to normalize policy
The BoE has now joined the Fed in the US and the Bank of Ca...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.