The Bank of England raised interest rates by half a percentage point Thursday as it sought to tame double-digit inflation that is fueling a cost-of-living crisis, public-sector strikes and fears of recession.
The bank’s monetary policy committee voted 7-2 to push its key rate to 4%, approving the 10th consecutive rate increase since a post-pandemic surge in the world economy and Russia’s war in Ukraine drove inflation to 40-year highs.
The bank pointed to high global inflation but said “it is likely to have peaked across many advanced economies, including in the United Kingdom," noting falling energy prices and fewer supply chain disruptions. “This forecast is consistent with the technical definition of a recession, which is at least two consecutive quarters of falling output,’’ the bank said. “But this is a much shallower profile for the decline in output than" expected in the November.
“The extent to which domestic inflationary pressures ease will depend on the evolution of the economy, including the impact of the significant increases in Bank Rate so far,” the bank said in a statement. “There are considerable uncertainties around the outlook.”
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