The Bank of England hiked interest rates to their highest level since 2009, raising by a quarter-point to 1% to counter inflation now trending past 10%.
Source: Bank of England
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The Bank of England’s rate-setters voted 6-3 in favor of raising the rate from 0.75%, with Catherine Mann, Jonathan Haskel, and Michael Saunders advocating for a bigger increase to 1.25% to prevent the risk of inflation surge getting embedded in the economy.
The BoE stated that it is concerned about the impact of China’s pandemic lockdown policies that threaten to hit supply chains again and increase inflation pressures.
The Bank of England stated that most policymakers believed some degree of further tightening in monetary policy might still be appropriate in the coming months.
The monetary policy committee also expects inflation in the UK to peak later than in other major economies due to Britain’s limit on household energy tariffs.