In spite of recent turmoil hitting the global banking industry, the Bank of England today increased borrowing prices for the eleventh consecutive day in an effort to free the UK economy of stubborn double-digit inflation.
The influential Bank Rate was increased by 0.25 percentage points to 4.25%, the highest level in 15 years, by the Bank's Monetary Policy Committee (MPC).
The MPC, which voted 7 to 2 in favor of the move and explained that its decision was in line with analysts' predictions, reaffirmed its stance that any future rate increases would depend on the arrival of inflation evidence.
Almost 1.4 million homeowners will immediately feel the effects of this announcement on their budgets as a result of increased mortgage interest.
Nathaniel Casey, the investment strategist at Evelyn Partners, said: “The split in voting is indicative of the tricky state of affairs confronting the MPC and other central banks, with committee members having to weigh the fragility of the global banking sector against the need to bring inflation back to target.
“The recent turmoil in the banking sector, which began with the collapse of Silicon Valley Bank (SVB) nearly a fortnight ago, has reminded central banks that things can break when monetary policy is rapidly tightened. Although contagion risks from the tech bank crisis and Credit Suisse look to have receded for the time being, the BoE will need to tread carefully if it decides to further tighten monetary policy from here.”
The next bank rate allowance will be on May 11 this year.
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