Bank of England raises interest rates to 0.75% in its 3rd straight hike, as Ukraine conflict threatens to drive up inflation
Bank of Englandraised borrowing costs for the third meeting running Thursday, putting its main interest rate up to 0.75%.
- The BoE said the Ukraine conflict is set to push
inflationeven higher by driving up energy prices.
The Bank of England raised
It came a day after the US
The BoE's Monetary Policy Committee raised the main interest rate to the pre-pandemic level of 0.75%, from 0.5%.
In March 2020, the MPC slashed the main rate to a record low of 0.1% to stimulate the
Like numerous other economies, the UK is facing red-hot inflation, with the consumer price index hitting a 30-year high of 5.5% year-on-year in January.
Although the Ukraine conflict threatens to derail European economies, central bankers think it will add to global inflation because it has driven up energy prices.
"The invasion of Ukraine by Russia has led to further large increases in energy and other commodity prices including food prices," the MPC said in a statement Thursday.
"Global inflationary pressures will strengthen considerably further over coming months, while growth in economies that are net energy importers, including the United Kingdom, is likely to slow."
The BoE said Thursday that inflation could now rise to 8% or more in the second quarter of the year, having previously expected it to peak at around 7.25% in April.
Britain's central bank tempered its language about the need for future interest rate increases, saying that they "may be appropriate." In February, the BoE said further hikes were "likely to be appropriate."
One policymaker on the nine-person committee, Deputy Governor Jon Cunliffe, voted to hold rates steady at 0.5%. He said that the Ukraine conflict posed risks to the economy, according to minutes from the decision meeting.
Traders expect the BoE to raise interest rates to above 2% by the end of the year, market pricing on Wednesday showed.
Yet Vivek Paul, chief UK investment strategist at BlackRock, said: "We think overtly aggressive rate hikes would exact a heavy toll on growth.
"Clear communication will be key, in our view, for the Bank to avoid creating confusion by over-tightening financial conditions and hurting the real economy."
- An American tourist in Seoul said he sprayed graffiti in 155 places to raise awareness about teeth grinding
- X could lose $75 million in ad revenue after a litany of controversies from Elon Musk, including his endorsement of antisemitic comments, report says
- The S&P 500 will trade near its all-time high before a recession drags it down again in a topsy-turvy 2024, Société Générale says
- White collar roles more at threat from AI
- Market cap of BSE-listed firms hits record high of Rs 331 lakh crore; just shy of entering $4-trillion club
- 10 Best honeymoon places near Delhi
- Samsung launches new smartphone with 50 MP camera in India
- Unveiling the sweet side of corn: 7 mouthwatering recipes