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Bank of England hikes rates for the first time in a decade

Thursday, Nov 02 2017
Bank of England hikes rates for the first time in a decade

Alongside Governor Mark Carney, the majority of rate-setters at the U.K.'s central bank voted in favor of hiking the benchmark rate to 0.5 percent from 0.25 percent. The Bank of England's decision to rate hikes Thursday sees the central bank fall in line with the U.S. Federal Reserve and to some extent the European Central Bank. The central bank expects the inflation rate to have peaked at 3.2 percent in October — and will be at 3 percent for the year as a whole. Speaking at a news conference shortly after the interest rate announcement, Carney said: "It isn't so much where inflation is now but where it is going that concerns us."

Carney stressed that rates would "gently" rise as inflation eases in the foreseeable future. The central bank expects the inflation rate to have peaked at 3.2 percent in October — and will be at 3 percent for the year as a whole. The bank had previously said that inflation would be 2.8 percent for 2017. The Bank said its nine rate-setters voted 7-2 to increase its benchmark rate. As expected, the two Monetary Policy Committee (MPC) members voting to keep borrowing costs unchanged were Jon Cunliffe and Dave Ramsden. However, most rate-setters decided it was the "appropriate" time to tighten monetary policy.

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