The Bank of England raised interest rates for a third consecutive meeting but softened its stance on the need for further hikes.
- Eight out of nine members of the Monetary Policy Committee (MPC) voted in favor of raising the Bank Rate to 0.75% from 0.5%, after the US Federal Reserve’s decision to raise borrowing costs for the first time since the pandemic started.
- Meanwhile, Deputy Governor Jon Cunliffe voted against the raise warning of a big hit to demand from surging commodity prices.
- The BoE stated that inflation was set to surge to around 8% in April, nearly a percentage point higher than it projected last month, and cautioned it could peak even higher later in the current year.
- Energy bills, driven by Russia’s invasion of Ukraine, are likely to surge in the autumn when regulated tariffs are reset.
A majority of the committee members stated they raised rates to cut the risk that recent trends in pay growth and inflation become factored in expectations.
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Source: Bank of England