The Bank of England (BoE) left the UK’s key interest rate unchanged at 5.25%. At the beginning of the week, financial markets were still anticipating a quarter-point increase in interest rates. However, a day before the interest rate decision, hopes for a rate halt rose after an unexpected slowdown in British inflation in August.
The Swiss central bank also unexpectedly left interest rates unchanged on Thursday on a busy central bank meeting day. Interest rates rose further in Norway, Sweden and Turkey.
Increase the interest rate fourteen times
The British Central Bank was one of the first central banks to raise interest rates in December 2021, raising them fourteen times in a row. The interest rate now remains unchanged at 5.25 percent. This is the highest level in more than fifteen years. Central bank decision makers were not unanimous on the interest rate decision. Five of the nine board members voted in favor of leaving the interest rate unchanged. Four would prefer to see an increase in interest rates.
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The central banks of Norway and Sweden raised interest rates by a quarter of a percentage point and kept the door open for further increases. The Norwegian central bank has already hinted that markets should not expect interest rate cuts next year. The Swiss National Bank decided to temporarily suspend interest rates, while economists expected an increase of a quarter of a percentage point. The Swiss Central Bank did not hint at the possibility of another increase later this year.
Türkiye reduces interest rates to 30 percent
The Turkish Central Bank has once again raised interest rates significantly to address high inflation in the country. There, the interest rate rose by 5 percentage points to 30 percent, as expected. In August, Turkey’s interest rate was already increased by 7.5 percentage points to 25 percent. In June, the Turkish Central Bank, led by a new governor, began to change the course of monetary policy, after Turkey had kept interest rates low for years despite rising inflation under pressure from President Recep Tayyip Erdogan.
Read also | The inflation rate in Türkiye rises to about 60 percent
