Interest rates to rise more to match ‘double-digit’ inflation – expert rings alarm bell

Hospitality: Interest rates to rise further to match inflation

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A markets commentator warned that the Bank of England could raise interest rates to “double figures” amid growing fears over rising inflation. Mike Cosgrove’s ominous forecast comes just one day after the Bank of England opted to raise interest rates to 0.25 percent. The decision sparked incredulity among British people given the escalation of the COVID-19 crisis that will unavoidably slow down the economy as many people’s income will plummet.

Mr Cosgrove now fears a similar scenario to that of Black Wednesday in 1992.

And he did not rule out that another ‘Black Wednesday’ could be on the verge of exploding in England, which would coincide with the 30th anniversary of the original one.

Speaking to LBC broadcaster Tom Swarbrick, Mr Cosgrove stated that Britain is in uncharted waters and warned that there could be yet another twist in the tale and that yesterday’s first increase in three years may not be the last.

Mr Cosgrove, who expects inflation to soar gradually, cannot predict the exact figure though, which could lie between an unlikely 0.5 percent rate to a more realistic 10 percent.

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Inflation currently lies at 5.1 percent, which is the highest in a decade and the only way to keep pace with surging inflation is to up interest rates.

He said: “This is where we are in unknown territory because if inflation keeps going higher, then the Bank of England will have to keep raising interest rates to tackle the rise in inflation.

“But I ask myself what interest figures will be powerful enough to tackle rising inflation? Is it 0.5 percent?

“No, I doubt it, that’s the equivalent of taking a pocket knife to a gunfire.

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“Will it be 1 percent? Or 3 percent? Or 5 percent?

“Imagine the scenario if it raises to 5 percent, I will tell you what’s a good thing to look back to, it’s Black Wedneday 1992.

 “If they raised it to 20 percent interest rates, which is very very high compared to what we have seen in the past two decades if that doesn’t stop inflation rising then they have to keep raising them.

“At one point during the nineties they pushed it up to 15 percent to tackle the rise in inflation, so we could be in a position where inflation could go double digits and interest rates need to raise to tackle it.”


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On September 16, 1992, the European Exchange Rate System dispensed with the UK after a crash of the pound sterling saw the value of the pound fell to below the minimum limit.

In the wake of the unprecedented disaster, the Bank of England rose the country’s interest rates from 10 percent to 12 percent before going a step further and elevating it to 15 percent.

Bank governor Andrew Bailey yesterday explained that he had to take action to tackle the mounting inflationary pressures building up in the economy.

He told the BBC: “In the short term, that is, in the next two or three months, we think inflation can get to around 6 percent.”


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