Bank of England announces rate hike to 1.25%

After the interest rate meeting last night (16th), the Bank of England announced to raise interest rates by 25 basis points to 1.25%, the highest level in nearly 13 years, and the fifth consecutive rate hike, in line with market expectations. In the Monetary Policy Committee (MPC), six members supported a 25 basis point rate hike and three supported a 50 basis point rate hike to tackle the 9% annual inflation rate that has been a near 40-year high. The statement after the meeting said the central bank would be particularly vigilant about more persistent inflation and pledged to take strong measures if needed. In addition, the Bank of England expects inflation to be above 9% in the coming months, rising to 11% and peaking in October. It is also expected that GDP will contract by 0.3% quarter-on-quarter in the second quarter, compared with an earlier forecast for an increase of 0.1%.