Financial markets are waiting for the reaction of the Bank of England to defend and forecast the British Pound. a new increase interest rates, After the collapse of the British currency as a result of the tax cut offered by the Liz Truss Government on Friday. The crisis worsened on Monday, with the pound at its lowest price since then. 1971Against a strong dollar after the Finance Minister, Kwasi Kwarteng, will fuel the fire by warning of even more tax cuts. “After frightening people so much on Friday, Looks like he’s now decided to intimidate even more “This is the result we saw this morning,” said Martin Weale, a former member of the Bank of England’s Monetary Policy Committee.
interest rate increase
Markets are predicting that the basic interest rate, which is currently 2.25 percentage points, will increase. Up to 4% in November and 6% in May of next year. The first of these increases could come next week as a weapon to defend the sterling, currently at 9.9%, and curb inflation.
Last Friday, the Liz Truss government announced a tax cut, oldest in 50 yearsSo radical, so massive, it far exceeded the scale of what was expected, causing the British currency’s sudden plunge and precipitating a crisis that the Bank of England should now try to stop after Monday’s heaving. “I’m afraid this kind of thing has not normally been tried and succeeded in Latin American countries”, it was the decision of the former conservative finance minister, Kenneth Clarke.
irrecoverable debt
What the new executive misleadingly called a “mini-budget” included all manner of tax breaks for individuals, corporations, and social contributions. The presentation, as usual, was not accompanied by figures and analysis from an independent body. Office of Budget Responsibilitya (OBR), evaluates the consequences of government decisions on inflation and public finances. Markets consider the level of indebtedness to be unaffordable and without this data they do not believe Truss’ strategy is credible. The government has said it will release the OBR report by the end of the year, an unacceptably long timeframe given the current turmoil and the Bank of England’s need to restore economic discipline.
Pound’s weakness further increases indebtedness due to energy bill and 150 billion euros to help homes and businesses. Energy is paid in dollars and subsidizing these amounts will now be more expensive. Kwarteng declined to comment on the new negative market reaction at the start of a highly volatile week. A government spokesperson assured that the budget would continue.
loss of control
Person in charge of economic affairs in Liverpool, where the Labor Party holds its annual conference, (Shadow Chancellor), Rachel ReevesThe Conservatives accused the Conservatives of “weakening” the independence of the Bank of England and compared Truss and Kwarteng to “two hopeless gamblers who bet all or nothing”, but “they don’t gamble with their money, they gamble with ours”. The government, Reeves stressed, It has lost its credibility, confidence and is out of control.”.
Source: Informacion
Christina Moncayo is a contributing writer for “Social Bites”. Her focus is on the gaming industry and she provides in-depth coverage of the latest news and trends in the world of gaming.