The Bank of England raised interest rates by 0.5 percentage point, raising fears that rising energy prices could force inflation to exceed 7% by April 2022.
With inflationary pressures still “well anchored,” the monetary policy committee (MPC) chose to vote by five to four to raise the rate of interest by 0.25%, making borrowing more expensive.
The opposing four members wanted to raise interest rates by 0.5 percentage point to 0.75 percent. The Bank of England earlier raised interest rates from 0.1 percent to 0.25 percent in December 2021.
Inflation rises
Inflation is expected to estimate near 6% in 2022, owing in part to worldwide supply chain issues.
Suren Thiru, the British Chambers of Commerce’s head of economics, stated:
“The Bank of England is seeking to dampen an inflationary surge it has little control over.
“Higher interest will do little to limit the soaring energy costs and persistent supply chain disruption that are driving the current spike in inflation.”
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