Bank of England raises UK interest rates to 4.5%
The Bank of England has raised interest rates by a quarter of a percentage point to 4.5% amid growing concerns about persistently high inflation in the UK.
The Bank’s monetary policy committee voted by a majority for a 12th successive increase in borrowing costs, continuing its most aggressive rate-hiking cycle since the 1980s in an attempt to dampen UK inflation which remains in double digits.
UK rates are at the highest level since October 2008, when the global economy was in the grips of the financial crisis.
The rate decision comes against a backdrop of stubbornly high inflation, with a modest decline in the annual rate to 10.1% in March leaving the UK with the highest rate in the G7 group of advanced economies. The Bank of England’s official inflation target is 2%.
Fuelled by food prices rising at the fastest annual rate since 1977, economists have warned that Britain risks inflation sticking at high levels this year, a development that could embarrass Rishi Sunak, whose stated target is to halve inflation this year.
The Bank of England hike comes after the US Federal Reserve raised its benchmark interest rate by a quarter-point to a range of 5% to 5.25% last week. The European Central Bank also raised its key interest rate by a quarter-point to 3.25%.
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