The Bank of England's (BoE) Monetary Policy Committee (MPC) voted 8-1 on Thursday to increase the Bank Rate from 0.50% to 0.75%. The only policymaker who did not agree with the move was instead in favor of keeping the main interest rate at 0.50%.
The bank decided to carry out the third interest rate hike in a row 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." The MPC pointed out that its current view is that "some further modest tightening in monetary policy may be appropriate in the coming months."
Central bank officials see inflation rising even further from 5.5% recorded in January 2022 to approximately 8% in the second quarter of the year and they attributed the raised projection to the increase in commodity prices, such as energy and food that came as a consequence of the events in eastern Europe. "Growth in economies that are net energy importers, including the United Kingdom, is likely to slow," the bank warned.
