The Bank of England decided at its meeting today, Thursday, to raise interest rates by 50 basis points to 3.5%, as planned, to counter inflation rates rising to record highs.
The Bank of England is trying to fight inflation well above its 2% target and has hiked interest rates sharply over the past 12 months.
Official data for UK consumer prices showed inflation fell more-than-expected in November to 10.7% from 11.1% in October, the highest in 41 years, making room for the Bank of England as it prepares for a new hike. rates.
Economists polled by Reuters had expected inflation to fall 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 on the appropriate level of borrowing costs.
Six MPC members – 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 against.
Two members – Swati Dhingra and Silvana Tenreyro – preferred to keep the interest rate at 3%. Katherine Mann favored an interest rate hike 75 points to 3.75%.
Most economists expected the Bank of England to raise interest rates again on Thursday to 3.5% from 3%, even as inflation appeared to have peaked, giving troubled households some respite .
And last month, the Bank of England said Britain was heading for a long-term recession, with inflation likely not to return to target rate before early 2024, while a budget observer from the The government has warned of the largest drop in living standards since records began in the 1950s.
“It’s important to make the tough decisions needed to tackle inflation,” UK Finance Minister Jeremy Hunt said after the latest inflation data.
