Bank of England raises bank rate from 0.25% to 0.5%

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By Isabel Coles and Jason Douglas


LONDON — The Bank of England raised its key rate for a second consecutive meeting, further ahead of other major central banks as they grapple with rising inflation.

The monetary policy committee responsible for setting rates agreed to raise the BOE’s benchmark rate to 0.5% from 0.25%, saying it expects annual inflation to pick up in above 7% within a few months due to low unemployment, rising wages and soaring energy prices.

The panel was divided on the size of a rate hike needed to rein in rising inflation, underscoring the challenge central bankers face as they balance rising prices and pandemic-related growth risks. .

Four of the nine panelists wanted a bigger hike, to 0.75%, citing wider and more persistent pricing pressures than expected. The majority, including Governor Andrew Bailey, voted for a quarter-point increase, saying that should be enough to bring inflation back to its 2% target in the next two to three years.

The BOE also said it would begin to slowly reduce the size of its bond-buying program by no longer reinvesting the cash it receives from maturing bonds in its portfolio, the first time a major bank central has embarked on a sustained effort to reduce its balance sheet. since the Fed attempted it in 2017.


Write to Isabel Coles at [email protected] and Jason Douglas at [email protected]


Corrections and Amplifications

This article was corrected at 8:46 a.m. ET because it incorrectly stated that the BOE was the first major central bank to reduce its balance sheet. The Bank of England said it would begin to slowly reduce the size of its bond-buying programme, the first time a major central bank has embarked on a sustained effort to shrink its balance sheet since the Fed attempted it in 2017.

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