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Rate increase by the Bank of England to 4.25 percent

According to a BoE statement released on Thursday, the Bank of England (BoE) increased its benchmark interest rate by 0.25 percentage points to 4.25 percent, the highest level since autumn 2008.

London, UK | BAZZUP | According to a BoE statement released on Thursday, the Bank of England (BoE) increased its benchmark interest rate by 0.25 percentage points to 4.25 percent, the highest level since autumn 2008.

The Monetary Policy Committee (MPC) of the central bank voted in favor of the rise by a margin of 7-2 at its meeting that ended on Wednesday, according to a statement.

The BoE has raised interest rates 11 times in a row since December 2021 in an effort to combat inflation, which unexpectedly soared to 10.4% in February, well beyond its 2 percent objective.

Nonetheless, the central bank’s prediction of a decline in inflation for the second quarter of 2023 was unaffected by the higher-than-expected inflation statistics. The government’s assistance with energy costs and decreases in wholesale energy prices, according to the bank, will cause inflation to decline at a slower rate than that predicted in the MPC’s February Report.

The BoE reports that instead of the 0.4 percent fall predicted in the February Report, Britain’s gross domestic product is now “likely to expand somewhat in the second quarter.”

The rate increase coincided with recent instability in the international banking industry. The British banking sector, according to the BoE, is “well placed to continue supporting the economy in a wide range of economic scenarios, including in a period of economic uncertainty.”

According to the bank, the MPC would keep “monitoring attentively indicators of sustained inflationary pressures” and, if required, consider tightening monetary policy even more.

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