UPDATES WITH DETAILS
By Ovunc Kutlu
ANKARA (AA) – The Bank of England (BoE) on Thursday raised its interest rates by 25 basis points to 0.75% to fight a record-high inflation.
While the figure hit its highest since March 2020 – right before COVID-19 was declared a pandemic – it marks the third consecutive meeting for the BoE announcing a rate hike.
The central bank raised interest rates twice in the last three months, the latest coming in February with 25 basis points of increase to 0.5%.
The annual inflation in the UK climbed to 5.5% in January, and the BoE aims to tame rising prices with rate hikes.
Inflation is expected to increase further in coming months, to around 8% in the second quarter of 2022 and perhaps even higher later this year, it added.
"Regarding inflation, the invasion of Ukraine by Russia has led to further large increases in energy and other commodity prices including food prices. It is also likely to exacerbate global supply chain disruptions, and has increased the uncertainty around the economic outlook significantly," the summary said.
"Global inflationary pressures will strengthen considerably further over coming months, while growth in economies that are net energy importers, including the United Kingdom, is likely to slow," it added.
The BoE said some further modest tightening in monetary policy may be appropriate in the coming months, but there are risks.
The bank said it will review incoming data and economic implications of recent geopolitical events.
While eight members of the BoE's Monetary Policy Committee supported to raise rates by 0.25 percentage points to 0.75%, only one member preferred to keep it unchanged at 0.5%.