The Bank of England has raised its benchmark interest rate to its highest level in 13 years in a
bid to tackle soaring inflation that the central bank forecasts could hit 10% this year.
Officials at England’s central bank voted for a fourth consecutive interest rate hike since last
December at a time when British citizens are grappling with skyrocketing living costs.
The Bank of England’s Monetary Policy Committee approved a 25-basis point increase by a
majority of 6-3, taking the benchmark interest rate up to 1%. The Bank said the members in the
minority preferred to increase interest rates by half a percentage point to 1.25%.
Annual inflation in the United Kingdom hit a 30-year high of 7% in March — more than three
times the central bank’s target level — as food and energy prices continue to surge.
The Bank of England said in a written statement announcing its latest rate hike that it expects
U.K. inflation to rise to roughly 10% this year as a result of the Russia-Ukraine war and
continuing COVID-19 lockdowns in China.
The central bank also warned that consume prices are likely to rise faster than income for many
people, deepening the cost-of-living crisis in the United Kingdom and throughout Europe.
The British pound traded down 1.2% at $1.2468 U.S. shortly after the interest rate decision. The
U.K. currency erased gains from the previous session, falling back towards its lowest level since
July of last year.
