The Bank of England raises its interest rates for the fifth consecutive time. The Monetary Policy Committee has decided this Thursday to raise the reference interest rate for its operations by 25 basis points, which will stand at 1.25%, its highest level since 2009, as announced by the institution, which has raised the price of money for the fifth consecutive meeting.
The decision to increase the price of money, announced after yesterday’s aggressive rise of 75 basis points by the United States Federal Reserve and the announcement by the European Central Bank (ECB) that it will raise rates in July for the first time in eleven years, was adopted by a majority of 6 to 3 in the BoE Committee.
In fact, the three minority votes against the decision to raise the rate by 25 basis points expressed their preference for an increase of half a percentage point, which would raise the reference interest to 1.50%.
In its analysis, the British central bank has warned that “not all of the excess inflation can be attributed to global events” and points out that the tight situation of the labor market and the strategies of companies have also played a role, fueling the inflation of consumer services, which is more influenced by internal costs.
Likewise, the Bank of England has warned that it expects inflation to exceed 9% in the coming months and even rise slightly above 11% in October, when a rebound in energy prices is expected due to prospects for additional hike in the tariff cap set by the energy regulator, Ofgem. In this way, the Committee has assured that it will take the necessary actions so that inflation returns to the 2% target in a sustainable manner in the medium term, in line with its powers.
“The scale, pace and timing of any further rate increases will reflect the Committee’s assessment of the economic outlook and inflationary pressures,” he explained, adding that he will be particularly alert to signs of more persistent inflationary pressures and, if necessary, it will act forcefully in response.
