The Bank of England decided, at its meeting today, Thursday, to raise interest rates by 50 basis points to 3.5%, as expected, to counter rising inflation rates to record levels.
The Bank of England is trying to combat inflation well above its 2% target and has raised interest rates sharply over the past 12 months.
Official data for consumer prices in Britain showed that inflation fell more than expected in November to 10.7% from 11.1% recorded in October, the highest in 41 years, providing some room for the Bank of England as it prepares for a new hike. in interest rates.
Economists polled by Archyde.com expected inflation to decline to 10.9%.
The decision to raise interest rates in Britain to 3.5% was not unanimous, as policy makers at the Bank of England were divided over the appropriate level of borrowing costs.
Six members of the MPC – Governor Andrew Bailey, plus Ben Broadbent, John Cunliffe, Jonathan Haskell, chief economists Howe Bell and Dave Ramsden, supported a half-point rate hike.
But three members voted once morest it.
Two members – Swati Dhingra and Silvana Tenreyro – preferred to keep the interest rate at 3%. Katherine Mann favored an increase in the interest rate by 75 points, to 3.75%.
Most economists had expected the Bank of England to raise interest rates once more Thursday to 3.5% from 3% even though inflation appeared to have peaked, giving hard-pressed families little respite.
And last month, the Bank of England said that Britain was heading towards a long-term recession, with inflation not likely to return to the target rate before the start of 2024, while a government budget watchdog warned of recording the largest contraction in living standards since records began in the fifties of the last century.
“It is important that we take the tough decisions required to tackle inflation,” UK Finance Minister Jeremy Hunt said following the latest inflation data.
