Source: Bank of England
The Bank of England raised its interest rate for the third time to 0.75% from the previous 0.5%, pointing to a desire to counter inflation which is rising amid high commodity prices. FTSE 100 is up +0.65%, GBPUSD is down -0.35%.
- The central bank hinted at further rate increases in the coming months, although it warned that “there are risks on both sides of that judgment.”
- BOE cited the case of the Russian war in Ukraine as an impediment to growth but emphasized that the central bank’s priority is to curtail the surging inflation.
- The central bank said that the rise in commodity prices following the Ukrainian crisis means that inflation could hold at around 8% in the next three months and rise further later in the year.
- BOE said that economies that are net energy importers such as the UK are likely to be hit by the growing inflationary pressures. The UK top bank acknowledged the risks of the rising costs to household incomes.
- The three consecutive rate hikes by BOE underline the most aggressive policy initiative by the central bank since mid-1997.