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The Bank of England on Thursday delivered its third consecutive interest rate rise in a bid to tame rampant inflation.
The Monetary Policy Committee voted by a majority of 8-1 to increase Bank Rate by 0.25 percentage points, to 0.75% from 0.50%.
The central bank's deputy governor Jon Cunliffe was the sole policymaker to have voted against the proposition, preferring to maintain Bank Rate at 0.50%.
The BoE warned Russia's invasion of Ukraine is likely to intensify inflationary pressures, exacerbate global supply chain disruptions and increase uncertainty over the economic outlook.
‘Inflation is expected to increase further in coming months, to around 8% in 2022 Q2, and perhaps even higher later this year,’ the central bank said.
The BoE said some further modest tightening may be appropriate in coming months, but acknowledged there were ‘risks on both sides of that judgement’ depending on how medium-term prospects for inflation evolve.
Further out, the BoE noted inflation was expected to fall back materially, and possibly to a greater extent than had been expected in its February Monetary Policy Report, as energy prices stopped rising and as the squeeze on real incomes and demand put significant downward pressure on domestically generated inflation.
The central bank expects UK economic growth to increase by around 0.75% in the first quarter of 2022.
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