2023-05-11 17:42:02
LONDON (AP) — The Bank of England announced Thursday that it raised UK interest rates to their highest level since late 2008 as it continues to stubbornly combat the country’s high rate of inflation.
The decision by the bank’s Monetary Policy Committee to raise its main interest rate by a quarter of a percentage point to 4.5% was widely anticipated by financial markets. The increase was the twelfth in a row. Only two members of the nine-member panel voted to keep interest rates unchanged.
Like other central banks around the world, the Bank of England has tried to rein in the rate of inflation, which was spiked last year by Russia’s invasion of Ukraine. That sent energy prices soaring, an event that later led to price increases on a wide range of goods and services.
The Bank of England began raising interest rates in late 2021 from a low of 0.1% to rein in price increases that were initially fueled by bottlenecks resulting from the lifting of COVID-19 pandemic restrictions. 19 and, later, by the Russian invasion of Ukraine. Higher interest rates help reduce the rate of inflation by making it more expensive for households and businesses to borrow, meaning they will potentially spend less, thus reducing demand pressure on prices.
The bank, which has a goal of keeping the inflation rate around 2%, said that rate would likely be halved from current levels to around 5% by the end of this year. Inflation will inevitably fall as year-on-year comparisons of energy prices decline.
1683827248
#Bank #England #raises #interest #rates #highest #level
