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The Bank of England becomes the first central bank to raise interest rates since the COVID-19 pandemic struck the global economy, citing inflation was likely to hit 6% in April.
Source: Bank of England
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A consensus estimate of most economists surveyed by Reuters expected the Bank of England to maintain the interest rate at 0.1% due to the emergence of the Omicron variant of the Covid-19.
Meanwhile, the Monetary Policy Committee noted warning signs that the underlying inflation rates might be persistent in the long run after its recent surge.
BoE stated that the labor market is tight and has continued to narrow, and there are some indicators of greater persistence in domestic cost and price pressures.
BoE further noted that the Omicron variant is likely to affect short-term activity, but its impact on medium-term inflation rates is unclear.
The nine-member MPC voted 8-1 to hike the rate to 0.25% from 0.1%, with the only external member Silvana Tenreyro opposing the move.
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