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‘Rate hike was to maintain 4% retail inflation target: Patel

‘Rate hike was to maintain 4% retail inflation target: Patel

While savers may be hoping for better returns, Bank of England statistics show that the average interest rate on United Kingdom current accounts increased by only 0.09% in the seven months since rates were increased by 0.25% past year.

The Reserve Bank on Wednesday hiked the repo rate by 25 basis points (bps) to 6.50 per cent in its third bi-monthly monetary policy review for the second straight meeting, due to inflation concerns but retained its "neutral" stance.

Many had expected a hike in May, but weaker than expected data stopped the committee from doing so. Throughout his tenure as governor, Carney has faced accusations of being a so-called "unreliable boyfriend", frequently promising rate hikes and then ultimately failing to deliver. As per reports, the hike of interest rates n June was a benchmark lending rate in past four years.

Ben Brettell, senior economist at Hargreaves Lansdown, commented: "The main argument for raising rates now is that it gives the Bank more room for manoeuvre when the next downturn hits".

The website Savings Champion said the average easy access account pays only 0.42 per cent, an increase of only 0.07 percentage points compared with September 2017. If credit demand gathers further steam in the financial year's second half, banks might have to respond with hikes in response to the competition for raising of resources.

"Even as inflation projections for Q2 have been revised marginally downwards vis-a-vis the June statement, projections for Q3 onwards remain broadly unchanged, RBI said". He called it an "unnecessary risk" in a note sent to clients this week.

And if we continue along that path, we can make sure that we don't add to the global risk profile that would adversely affect us. The number of people in jobs is at a record high. "The rise threatens to dampen consumer and business confidence at an already fragile time".

'The United States is not trustworthy': Iran rejects meeting with Trump
Speaking at a White House news conference on Monday, Trump said , "I would certainly meet with Iran if they wanted to meet". Iran's foreign ministry spokesman on Tuesday said Trump's offer to negotiate with Tehran contradicts his actions.

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This quicker transmission in the deposit rate could be partly attributed to the reversal of the interest rate regime witnessed in recent months, said CARE.

"It has always been the MPC's explicit assumption that "households and companies (will) base their decisions on the expectation of a smooth adjustment to new trading arrangements", he said.

"The swiftness with which the central bank has responded to the jump in inflation should prevent the need for very aggressive policy changes in the future", Capital Economics analyst Shilan Shah said in a note.

How many more rate rises can we expect?

Charlotte said: "Today's rate decision is a beacon of hope for savers, who have grown exhausted of the low rates that have plagued them for so long".

Economists polled by Reuters had mostly expected a 7-2 vote in favour of a hike.


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