Bank of England Raises Interest Rates by 0.50 Percentage Points

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by Will Horner

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LONDON – The Bank of England raised its key interest rate for the seventh time in a row on Thursday but stopped short of accelerating the pace of its rate hikes as the government measures to cap rising energy bills to reduce inflation in the coming months. had promised.

In a statement, the bank raised its key rate from 1.75% to 2.25%, marking the second time in as many meetings that the bank has opted for a half-percentage hike, and its seventh consecutive rate hike – its longest in the 90s. The cycle of interest rate increases since the latter half of the decade.

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Of the nine members of the BoE’s Monetary Policy Committee, five voted for a half-point rate hike, while three voted for a larger three-quarter-point increase in interest rates and another a smaller one. Voted for the quarter point jump. Divided views highlight competing concerns and conflicting economic signals facing central bank officials around the world, but which are particularly evident in the UK

Central bank officials also voted unanimously to move forward with plans to sell some of BOE’s holdings of UK government bonds, with the sale slated to begin shortly after the meeting.

BoE officials pointed to recent government measures, citing the option of a half-baked hike, saying rising energy bills are expected to help reduce one of the biggest contributors to UK inflation.

In its last meeting, the bank had warned that inflation would be above 13%. The bank said on Thursday that the recently announced cap would mean consumer price growth would be just under 11% in October, but inflation is likely to remain in double digits for a few months before falling. Government support would mean consumers would spend more at a later date adding to inflation in the medium term.

Write to Will Horner at [email protected]

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