Bank of England Raises Interest Rates as Inflation Pressures Scale Up

The Bank of England on Thursday became the world's first major central bank to raise borrowing costs since the coronavirus pandemic heavily hit the global economy last year, as it said inflation was set to hit 6% in April, three times the target level. Most economists polled by Reuters had expected the BoE's Monetary Policy Committee to keep Bank Rate at 0.1% due to a new surge in COVID19 cases.

The BoE said, "The Committee continues to judge that there are two-sided risks around the inflation outlook in the medium term, but that some modest tightening of monetary policy over the forecast period is likely to be necessary to meet the 2% inflation target sustainably,"

The nine-member MPC voted by 8-1 to raise Bank Rate to 0.25% from 0.1% with external member Silvana Tenreyro providing the only dissenting voice. The BoE cut its growth forecasts for December and the first quarter of 2022 because of the spread of Omicron.