The Bank of England is expected to raise interest rates
With inflation worryingly high, and the banking system in turmoil, central bankers face a difficult challenge.
Today, the Bank of England will announce whether it has adjusted UK borrowing costs, or left them unchanged.
The 10.4% rise in UK inflation yesterday has led many investors to expect the Bank of England's Monetary Policy Committee to raise the Bank Rate by a quarter of one percent today, to 4.25%.
The Consumer Price Index rose 10.4 percent in February.
The central bank announced its 11th interest rate increase in a row, extending a tightening cycle that began in December 2021.
However, policymakers may be wary of raising interest rates further as the problems in the banking sector over the past month demonstrate that last year's rate increases are having an impact now.
The Bank of England could raise rates by a small amount, signalling that borrowing costs are near their peak. But such a move would be more palatable if inflation was not in double digits.
Ellie Henderson, an economist at Investec, states:
When determining the appropriate level of the Bank rate, the MPC must weigh two evils: higher inflation for a longer period of time or the current threat to financial stability stemming from fears of a banking crisis.
In the face of accelerating inflation, the MPC may raise interest rates or wait and see how events unfold over the coming weeks.