The Bank’s Monetary Policy Committee voted by a majority of 7–2 to increase the rate by half a percent, bringing it up to 4%. Rates now are the highest they have been since the start of the global financial crisis in October 2008.
Andrew Bailey, Bank of England Governor, has drawn criticism for allowing inflation to sky-rocket to 11.1% in October, a level that hasn’t been seen since 1980. This figure is far beyond the 2% target.
At a press conference, he warned that it was too early to claim success yet because inflationary pressure remained.
Inflation has come down for two consecutive months since then and sits at 10.5%.
The Bank of England predicts the economic downturn in the UK this year to be slighter than expected; inflation is most likely to have reached its high point in many leading economies.
Meanwhile, the European Central Bank lifted interest rates by 0.5 percentage points to 2.5% and hinted that another rate hike may follow in the near future.
The US Federal Reserve increased rates by 0.25 percentage points on Wednesday, bringing them from 4.5 to 4.75pc. Despite this move, Fed chairman Jerome Powell noted that the bank needed to continue their efforts in order to reach the 2pc inflation target.
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