There was no easy option for the Bank of England’s Monetary Policy Committee (MPC) this week. Raising interest rates, even by a small amount, could add to financial instability following the collapse of Silicon Valley Bank and takeover of Credit Suisse over the past few weeks. But holding the base rate at 4 per cent might lead to accusations of ignoring double-digit inflation, which rose on the year in February for the first time since the Consumer Prices Index (CPI) peaked last October.
Today, the MPC opted for the latter – voting 7-2 in favour of raising the base rate by 0.25 percentage points, from 4 per cent to 4.25 per cent. It’s the eleventh consecutive hike since the UK emerged from a period of ultra-low interest rates during the pandemic. But the rise is less aggressive than the increases seen in previous months. Two members who voted against the rise voted to keep rates at 4 per cent.
The hike follows the
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