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Financial News: BoE Hikes Key Rate For Fifth Session

BoE Hikes Key Rate For Fifth Session

06/16/2022 - 07:35:00 (RTTNews)

(RTTNews) - The Bank of England raised its key interest rate for the fifth straight session on Thursday, as inflationary pressures intensified amid the labor market tightness.

The Monetary Policy Committee, led by Governor Andrew Bailey, voted 6-3 to raise the bank rate by 25 basis points to 1.25 percent, the highest rate since early 2009.

The bank has raised the rate by a total 1.15 percentage points since December. The majority of members observed that labor market remained tight and indications of broader domestic inflationary pressure required a response in order to ensure inflation returned sustainably to the target in the medium term.

Jonathan Haskel, Catherine Mann and Michael Saunders preferred a 0.5 percentage point increase to 1.50 percent. They said faster policy tightening now would help to bring inflation back to the target sustainably in the medium term, and reduce the risks of a more extended and costly tightening cycle later.

"The scale, pace and timing of any further increases in Bank Rate will reflect the Committee's assessment of the economic outlook and inflationary pressures," the bank said.

The MPC forecast consumer price inflation to be over 9 percent during the next few months and to rise to slightly above 11 percent in October. The increase in October reflects higher projected household energy prices.

Bank staff now expected GDP to fall by 0.3 percent in the second quarter, below the May Report projection of 0.1 percent growth.

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