The Bank of England has raised its trendsetting interest rate by 50 basis points to 2.25% from
1.75% previously as it struggles to lower inflation that is running close to 10%.
Inflation in the United Kingdom currently sits at 9.9%, which is nearly five times higher than the
central bank’s 2% target.
Energy and food prices across the U.K. have seen the biggest increases, but core inflation that
removes those volatile components, is at 6.3% on an annual basis.
The Bank of England has now raised interest rates seven consecutive times and has lifted its
key Bank Rate to its highest level since the global financial crisis of 2008-09.
The latest rate decision comes amid multiple challenges in England, including an increasingly
weak British pound and growing fears of a recession. There is also an energy crisis across
Europe and the recent death of Queen Elizabeth.
Both the Bank of England and the British Chambers of Commerce have forecast that the U.K.
will enter a recession before year’s end.
England is not alone in raising interest rates. The European Central Bank increased rates by 75
basis points earlier this month, while Switzerland’s central bank hiked rates by 75 basis points
this week. Sweden recently raised its benchmark interest rate by a full percentage point.
