UPDATE - Bank of England hikes interest rate to 13-year high

UPDATES WITH MORE DETAILS

By Tuba Sahin

ANKARA (AA) – The Bank of England (BoE) on Thursday raised its interest rate by 25 basis points to 1%, the highest level since 2009.

Six of the Monetary Policy Committee's nine members backed the move, while three voted for a hike of 50 basis points, the BoE said in a statement.

Pointing to geopolitical developments, surge in energy prices and rising inflationary pressures, the bank said: “Nevertheless, given the current tightness of the labor market, continuing signs of robust domestic cost and price pressures, and the risk that those pressures will persist, the Committee voted to increase Bank Rate by 0.25 percentage points at this meeting.”

It said most committee members suggested a further tightening in monetary policy in the coming months based on updated assessment of the economic outlook.

The bank revised up its forecasts for annual consumer inflation to over 10% at its peak in the last quarter of 2022, saying the “majority of that further increase reflects higher household energy prices.”

Annual consumer inflation in the UK hit its highest-ever level of 7% in March.

In March, the BoE hiked interest rates by 25 basis points to 0.75% from 0.50%.

On Wednesday, the US Federal Reserve also hiked its benchmark interest rate by 50 basis points, the steepest increase in over two decades, pushing it up to a range of 0.75% to 1%.​​​​​​​