The Bank of England's (BoE) Monetary Policy Committee (MPC) announced on Thursday its decision to raise the key interest rate by 50 basis points (bps) to 3.5%, slowing down the hiking pace following one of 75 bps introduced in November. The increase was voted out by a majority of 6–3.
The MPC predicted the United Kingdom's gross domestic product (GDP) will decrease by 0.1% in the fourth quarter of the year, which is 0.2 percentage points better than the estimate made in November. The body also noted that the labor market remains tight and that global inflationary pressures are still strong. It projected that the growth of consumer prices will go down gradually in the first quarter of 2023 with the easing in the costs of energy and other goods.
"Monetary policy will ensure that, as the adjustment to these shocks continues, CPI inflation will return to the 2% target sustainably in the medium term," the committee pointed out.
