Rates: the BoE raises its rates and paves the way for further tightening

(Boursier.com) — No surprise on the London side. The Bank of England (BoE) has raised its key interest rate by a quarter of a point, to 4.5%, the highest since 2008. The decision was voted by seven votes, Silvana Tenreyro and Swati Dhingra , having once again expressed their opposition to a further hike. “If there were to be evidence of more persistent pressures, then a further tightening of monetary policy would be necessary”, underlines the Monetary Policy Committee (MPC), taking up the same orientations as in February and March.

“The pace at which domestic inflationary pressures abate will depend on developments in the economy, including the impact of the large rate increases achieved so far. Uncertainties surrounding the global financial and economic outlook remain elevated.” , adds the MPC.

In addition, the BoE, led by Governor Andrew Bailey, has made the biggest update to its growth projections since the Bank’s independence in 1997: whereas it previously expected a recession, it now anticipates that the real economy will be 2.25% larger by mid-2026 than it thought in February.