The Bank of England raised its key interest rate to the highest level in 13 years on Thursday as policymakers around the world combat inflation fueled by high energy prices, Russia’s war in Ukraine and lingering concerns about COVID-19.
The central bank hiked rates for the fourth time since December as U.K. inflation runs at 30-year highs. Its Monetary Policy Committee voted 6-3 to lift the rate that the Bank of England pays other banks by a quarter-percentage point, to 1%. The three members in the minority wanted to raise it even higher — by half a point to 1.25%, the bank said, in a sign of growing momentum for strong action to counter rising consumer prices.
“Global inflationary pressures have intensified sharply following Russia’s invasion of Ukraine. This has led to a material deterioration in the outlook for world and U.K. growth,” the bank said.
It said those developments and COVID-19 restrictions in China have worsened the supply chain shocks that the United Kingdom and other countries face.
The decision comes a day after the U.S. Fed approved the biggest rate increase in more than two decades and signaling that more are on the way, to a range of 0.75% to 1%.