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Bank of England raises interest rates to 13-year-high

May 5, 2022

It is the fourth month in a row the central bank's Monetary Policy Committee has voted for a rise. Policymakers are currently trying to stem inflation amid high energy prices sparked partly by Russia's war in Ukraine.

Bank of England in London
The Bank of England is following the US in increasing its interest rateImage: YAY Images/IMAGO

The Bank of England raised its key interest rate to the highest level in 13 years on Thursday amid growing concerns over high energy prices sparked by Russia's war in Ukraine.

It was the fourth straight rate rise by the financial institution, which also remarked that British annual inflation would surpass 10% this year.

Some committee members wanted bigger hike

The central bank's Monetary Policy Committee voted 6-3 in favor of the increase, raising the figure that the Bank of England pays other banks by a quarter-percentage point to 1%. The three who voted against the 0.25% rise wanted to see a 0.5% rise.

Surging consumer prices in the UK are fueling a cost-of-living crisis marked by rocketing energy bills and surging food and transport prices.

Global trend

The Bank of England's decision comes a day after the US Federal Reserve stepped up its efforts to combat inflation, agreeing to the biggest rate increase in more than two decades.

Other central banks across the globe, from Sweden to Australia, have also started making similar moves as the uncertain financial route out of the coronavirus pandemic has been made even more complex by Russia's attack on Ukraine.

US Fed rate hike unlikely to tame inflation

jsi/sms (Reuters, dpa, AFP, AP)