Bank of England raises interest rate to 4.25 pct

London, UK | Xinhua | The Bank of England (BoE) has raised its benchmark interest rate by 0.25 percentage points to 4.25 percent, the highest since autumn 2008, according to a BoE statement issued on Thursday.

At its meeting ending on Wednesday, the central bank’s Monetary Policy Committee (MPC) voted in favor of the increase by a majority of 7-2, said the statement.

This is the 11th consecutive rate hike since December 2021 as the BoE continues its fight against inflation, which unexpectedly jumped to 10.4 percent in February, far above the BoE’s 2 percent target.

But the higher-than-expected inflation data did not change the central bank’s forecast of a fall in inflation for the second quarter of 2023. The bank said inflation will fall to a lower rate than anticipated in the MPC’s February Report, due to government support for energy bills and falls in wholesale energy prices.

According to the BoE, Britain’s gross domestic product is now “expected to increase slightly in the second quarter, compared with the 0.4 percent decline anticipated in the February Report.”

The rate rise came amid the recent turmoil in the global banking sector. The BoE judged that the British banking system “remains resilient” and “is well placed to continue supporting the economy in a wide range of economic scenarios, including in a period of higher interest rates.”

The bank said the MPC will continue to “monitor closely indications of persistent inflationary pressures” and consider further tightening in monetary policy if necessary. ■