The Bank of England raised its key interest rate by a quarter of a percentage point to 4.5%.
Bank Rate at highest since 2008Growth upgrade is biggest since forecasts began in 1997
"We have to stay the course to make sure inflation falls all the way back to the 2% target," Bailey said in a statement at the start of a press conference. "Inflation data will be watched extremely closely over the next few months and may be a source of market volatility especially around currency, with sterling now pricing in more aggressive action from the BoE from here compared to other central banks," abrdn senior economist Luke Bartholomew said.
Energy prices have now fallen sharply and the central bank expects inflation to drop to 5.1% by the end of this year from 10.1% in March. But this is less of a decline than the drop to 3.9% it forecast in February and the BoE predicts inflation will not return to its 2% target until early 2025.
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