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Bank of England hikes interest rate

Document Cited in Related
Vincent
Published date17 June 2022
Publication titleHuddersfield Daily Examiner
The bank's experts set the rate at 1.25%, a rise from 1% previously, and the fifth increase in a row as it tries to tame runaway inflation

It also warned that prices for households across the country might increase even further than previously thought.

Three of the nine-person Monetary Policy Committee (MPC) voted for an even bigger hike, arguing that rates should rise as high as 1.5%.

"In view of continuing signs of robust cost and price pressures, including the current tightness of the labour market, and the risk that those pressures become more persistent, the committee voted to increase Bank rate by 0.25 percentage points," it said in a notice.

For the MPC, which decides on rates, a key concern is inflation.

The committee is tasked with keeping inflation constant at around 2%, a target it is currently well clear of.

The cost of living has been soaring for months, with consumer prices index (CPI) inflation hitting a 40-year high of 9% in April when the energy price cap was hiked.

But things are set to get even worse later this year. Experts currently expect that regulator Ofgem could put up energy prices even further, from £1,971 per year to around £2,800.

This, alongside other pressures in the economy, could lead to CPI topping 11% in October, the Bank said.

Just a month ago it had predicted inflation to peak at above 10%.

"The economy has recently been subject to a succession of very large shocks," Bank

Governor Andrew Bailey wrote in a letter to Chancellor...

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