The Bank of England has raised interest rates for a second time in three months, to 0.5%, as it warned that surging energy bills would push inflation higher than expected, to more than 7% by April.
Five members of the MPC voted in favour of the rise to 0.5% while four voted to raise rates to 0.75%. The rise marks the central bank’s first back-to-back increase since June 2004, after it lifted rates from 0.1% to 0.25% in December 2021.
The increase also comes on the back of official data published in January that showed inflation had risen to its highest level in more than a decade. The consumer prices index (CPI) measure of inflation hit 5.4% in the year to January. Periods of high inflation often lead to interest rate rises, in a bid to stop or slow people’s spending, which may then supress inflation.
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