BoE raised its Bank Rate by 25 basis points to 4.25% as expected, with a 7-2 vote by the Monetary Policy Committee. MPC members Swati Dhingra and Silvana Tenreyro voted against the rate hike, opting for no change, while no member voted for a larger increase.
The central bank left the possibility of further rate hikes open, stating, “if there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required.” Simultaneously, it also means the door is open for a pause in the rate hike cycle too.
BoE acknowledged that CPI inflation “increased unexpectedly in the latest release” but maintained that it is “likely to fall sharply over the rest of the year.” The central bank emphasized that the degree to which domestic inflationary pressures ease will depend on the economy’s evolution, including the impact of the significant Bank Rate increases so far.
