LONDON — The Bank of England on Thursday implemented a fifth consecutive hike to interest rates as it looks to rein in soaring inflation.
The Monetary Policy Committee voted 6-3 to increase the Bank Rate by 25 basis points to 1.25%, with the three dissenting members voting for a 50 basis point hike to 1.5%.
The Bank faces the unenviable task of bringing consumer prices back under control against a backdrop of slowing growth and a rapidly depreciating currency, while the U.K. faces a major cost of living crisis.
At its May meeting, the Bank raised its base rate by 25 basis points to 1%, its highest level for 13 years, but warned that the British economy risks falling into recession.
Since then, fresh data has shown that U.K. inflation soared to a 40-year high of 9% annually in April as food and energy prices spiraled, and the country faces a major cost of living crisis. The Bank expects inflation to rise above 10% later this year.
The economy unexpectedly shrank by 0.3% in April after a 0.1% contraction in March, the first back-to-back declines since April and March 2020, and the OECD has forecast that the U.K. will be the weakest G-7 economy next year as higher interest rates, tax rises, reduced trade and spiraling food and energy prices hammer households.
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