The Central bank of England raised its key interest rate to 3.5% from 3% on Thursday, its ninth rate rise in a row as it tries to speed inflation’s return to target after price growth hit a 41-year high in October.
This time, officials opted for less aggressive action after data this week showed inflation slipped from a 41-year high.
“The labor market remains tight and there has been evidence of inflationary pressures in domestic prices and wages that could indicate greater persistence and thus justifies a further forceful monetary policy response,” the Bank said in a statement detailing its decisions.
It was the ninth consecutive increase since December 2021 and follows last month’s outsized three-quarter point rate hike, the biggest in thirty years.
The Central bank of England Monetary Policy Committee voted 6-3 in favor of the move and said the monetary policy was set to meet the 2 percent inflation target and sustain growth and employment, according to a statement.
The Central Bank move follows the U.S. Federal Reserve’s decision on Wednesday to raise its main rate by half a point, as Western central banks grapple with post-COVID labor shortages and the impact of Russia’s invasion of Ukraine on energy prices.
Norway’s central bank raised borrowing costs to the highest level in more than a decade and signaled it still plans to hike its key interest rate to 3% at the beginning of next year even as the Nordic country faces a recession.
Central banks worldwide have been battling to keep inflation under control, but Bank of England policymakers face extra pressure to strike the right balance because Britain’s economic outlook is worse than any other major economy.
