BoE raises the Bank Rate by 25bps to 1.25%. The decision was not unanimous, with three members (Catherine Mann, Michael Saunders and Jonathan Haskel) voted for a 50bps hike. The MPC said it will take necessary actions to return inflation to 2% target. The scale, pace and timing of further rate hikes will reflect the assessment of economic outlook and inflation pressures.
Nevertheless, it emphasized, “the Committee will be particularly alert to indications of more persistent inflationary pressures, and will if necessary act forcefully in response.”
BoE also said GDP was weaker than expected in April, and it expect GDP to fall by -0.3% in Q2 as a while, weaker than anticipated at in the May Monetary Policy Report. CPI inflation’s rise to 9% was “close to expectations” at the time of the May report. CPI is expected to be over 9% “during the next few months” and rise to “slightly above 11% in October.
