Bank of England to Spike Rates to the Highest Level, Repo Rates Increased by RBI Amidst Rising Inflation

The Bank of England is likely to spike the rates to the highest level since the recession caused in 2008, even though there have been serious concerns that the economy is breaking amidst the cost of living crisis.

As per economists, the bank will increase its base rate by at least 0.25 percentage points to 1% on Thursday, enhancing borrowing costs to the match level set in February 2009 while it was cutting rates to historic lows as the global financial system imploded. 

Increasing rates to 1% would also offer opportunities to banks to sell down some of their 875 Bn Euros portfolio of UK government bonds built up through its quantitative easing stimulus program since the 2008 financial emergency.

In another instance, the RBI (Reserve Bank of India) today announced the hike in repo rate by 40 bps to 4.4% for the first time in almost two years. The announcement comes amidst a time when inflation has been increasing to an 18-month high amidst a rebound in Indian economic activity. 

Experts remark that with inflation increasing in the aftermath of the Russia-Ukraine war and rising oil prices, the RBI took a tough unscheduled decision in an off-cycle monetary policy meet. 

“However, this was expected, as inflation has moved into the threatening zone. Unfortunately, this hike signals an imminent end to the all-time low-interest regime for home buyers, which has been one of the major motivations behind home sales across the country since the pandemic began,” Anuj Puri, Chairman – ANAROCK Group.

Some specialists believe that there will be a little hike in the home loan interest rates in the coming time. However, in comparison, some said that from a real estate perspective, they do not expect an immediate hike in home loan rates by commercial banks, which will also be a good time for homebuyers keen on buying.