Bank of England tries to rein in soaring inflation

The Bank of England (BoE) on Thursday raised the benchmark interest rate for a ninth time in a row this year, in an effort to combat double-digit inflation in the country.

The Monetary Policy Committee (MPC) voted to increase the cost of borrowing by 50 basis points to 3.5% after the consumer price index showed annual inflation of 10.7% last month.

The hike takes UK rates to their highest level since October 2008 and comes despite expectations that the nation is falling into a lengthy recession. It marked a slowdown, however, in the pace of rate rises, from November’s 75-basis-point increase.

“The labor market remains tight and there has been evidence of inflationary pressures in domestic prices and wages that could indicate greater persistence and thus justifies a further forceful monetary policy response,” the MPC stated, signaling that more tightening may be needed.

Consumer price inflation in the UK accelerated to a 41-year high of 11.1% in October, fueled by skyrocketing costs of food and energy.

The BoE said last month the economy was probably already in a recession that could last until the end of 2023. It now expects the country’s gross domestic product to decline by 0.1% in the fourth quarter of 2022.

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