The Bank of England’s (BoE) monetary policy committee has voted by a majority of 6-3 to raise the interest rate from 1% to 1.25%.
The minority of the MPC voted to raise the rate even further to 1.5%, but were outvoted. Now, the level of interest is the highest it’s been since 2009.
This increase is the fifth rise in a row in an attempt to offset the impact of rising inflation. The BoE has also increased its inflation forecast for the year with CPI inflation expected to surpass 11% in October.
The monetary policy summary said UK GDP was ‘weaker’ than expected in April, with the BoE predicting it will fall by a further 0.3% in Q2 2022 as a whole.
The BoE said: “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%, to 1.25%, at this meeting.
“The MPC will take the actions necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit. 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.”
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