(BoE) The Bank of England has increased the interest rate by 0.25 percentage points to 1% as policy tightening continues in the wake of high inflation rates.
The central bank cited global inflationary pressures, which have increased following the Ukrainian war, and the existing supply shocks in the raised rates. The bank expects the inflation to rise further, from March’s 7% to just over 9% in the second quarter of the year.
BoE further stated that the GDP has risen by 0.9% in the first quarter of 2022, which is stronger than expected, while the unemployment rate has declined to 3.8%, with further room to fall.
The central bank maintained that the UK GDP is expected to slow sharply in the course of the first half of the year on global cost pressures. The expectation, coupled with high inflation, BoE said was a challenge to a policy decision, adding that as inflation cools, the central bank could turn more dovish.
At 1%, the UK interest rate is the highest in thirteen years. A minority of members of the central bank’s Monetary Policy Committee had recommended a 0.5 percent point hike.
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