Bank of England (BoE) Deputy Governor for Monetary Policy Ben Broadbent noted on Wednesday the institution cannot be sure at this very moment what is going to happen to interest rates in the future as they "are not an end in themselves" but a "means of meeting our objectives: the stabilization of inflation over the medium term and, subject to that, the stabilization of economic activity."
Speaking at Gresham College, Broadbent stated that Russia's military intervention in Ukraine and the COVID-19 pandemic before that have led to "substantial rises in the cost of energy and other commodities" and expressed doubts the United Kingdom "has ever experienced an external hit to real national income on this scale." He went on to stress the relationship between a rise in inflation and combating it by raising interest rates as the rates "have a powerful impact on current demand and economic activity."
Earlier this month, the BoE decided to raise the Bank Rate by 25 basis points, from 0.50% to 0.75% due to "current tightness of the labor market, continuing signs of robust domestic cost and price pressures, and the risk that those pressures will persist."
