The Bank of England (BoE), the central bank of the United Kingdom, decided on February 3 to raise interest rates from 0.25% to 0.5% to curb sharp inflation.
The World Bank’s nine-member Monetary Policy Committee (MPC) voted 5-4 in favor of this decision. All four members of the opposition voted for a significant increase of 0.75 percent.
This is the second rate hike in three months and the first consecutive rate hike since 2004.
In December, the BoE raised interest rates by 0.15 percentage points to 0.25 percent, with the first major central bank raising interest rates since the start of the CCP (Chinese Communist Party) virus pandemic.
The MPC said on February 3 that it expects the consumer price index (CPI), which rose to a high of nearly 30 years at 5.4% in December, to rise to nearly 6% in February and March. .. It is then expected to peak at 7.25 percent in April.
At a press conference after the interest rate was set, Bank of England Governor Andrew Bailey said: The economy has just returned to its scale just before the pandemic a few years ago. “
“Raising interest rates is necessary because without it, inflation is unlikely to return to its target,” he said.
Soaring energy prices are the driving force behind rising inflation expectations. Earlier that day, UK energy regulator Ofgem said the regulated price cap, which is reviewed every six months, rose historic 54% from April, the same month that taxes were set. Announced that it will be £ 1,971 ($ 2,683) annually. To go up in the UK.
The UK government has said it will provide a series of financial support measures worth around £ 9 billion ($ 12 billion) to get out of the energy surge.
The scheme announced by Prime Minister Rishi Sunak will provide most households with a total energy discount of £ 350 ($ 476).
Bailey said the prime minister’s support measures would help relieve some household pressure.
“If we don’t take this step, it will get worse,” he said, in response to concerns that the market might continue to rise at the worst of times for households.
Banks say the economy is expected to recover rapidly from the effects of the Omicron COVID-19 mutant in December and January, but growth will slow to a “suppressed rate” as inflation affects spending. rice field.
This will raise the UK unemployment rate from 4% this year to 5% in 2024.
Tom Ozimek and PA Media contributed to this report.