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The Bank of England predicted Thursday, that the country would face a recession by the end of the year.
Interest rates have risen by the country's largest amount in 27 years; up three-quarters of a point, to 1.75%. The present interest rate is as high as the interest rate in 2008, at the onset of the global financial crisis.
The War in Ukraine was the main concern for the economists in London. Andrew Bailey, the governor of the bank of England, had this to say about possible issues with the UK economy:
“There is an economic cost to the war, … But I have to be clear, it will not deflect us from setting monetary policy to bring inflation back to the 2% target.”
Experts in the UK predict that inflation in the country will reach 13% in the next three months, and is expected to remain high throughout 2023. The inflation prediction is alarming after seeing a 40-year high of 9.4% in the month of June. Forecasters are predicting that the country will experience five straight quarters of GDP decline. Which has been historically difficult to come back from.
What does this mean for the United States?
The U.S. Federal Reserve has already increased its key interest rates three-quarters of a point in each of the past two months setting the current rate in a range between 2.25% and 2.5%.
We reported earlier in the week that the United States GDP had shrunk for two consecutive quarters, which is in line with the traditional definition of a recession. The Biden administration has publicly stated we are not in a recession. Scrambling to change definitions of the term recession to make the economy appear better than it truly is.
One final note:
Economists are warning U.S. homeowners of steep increases in the cost of energy to heat homes throughout the winter. Experts predict all-time highs in fuel prices if conflicts in Ukraine Continue into 2023.
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SeattlePI |
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