The Bank of England increases interest rates to a record high

“High energy and food prices, and tight labour markets have led the Bank of England to maintain a hawkish posture, increasing rates by 0.75bps in November, to 3%, after hiking by 0.5bps in September. This is the steepest rate hike in 33 years.

“While supply-chain pressure, globally and in the UK, starts easing, the fast transmission from energy prices to the rest of the economy erodes households’ purchasing power and hits demand. A recession is highly likely. And although the current monetary policy might prove painful for households and businesses, the pain that an out-of-control inflation would inflict to them and the broader economy would be much higher, which is why the Bank of England is so determined to bring inflation back to the target. Businesses should therefore expect further rate hikes in the near term.

“Smart and effective use of data can help businesses stay resilient in the current times of economic uncertainty. This means looking across their business at their suppliers, ensuring their supply chains can continue to be viable; that they are monitoring their customers with increased scrutiny, to ensure they are paid on time have a strong cash flow; and identifying new customers and markets or detect changes in demand from existing ones to help ensure a robust sales pipeline.”

Tommaso Aquilante, Associate Director of Economic Research at Dun and Bradstreet