Bank of England raises key rate to highest level in 13 years

May 5, 2022, 3:17 AM | Updated: 8:54 am
A bus drives past the Bank of England before the release of the Monetary Policy Report at the Bank ...

A bus drives past the Bank of England before the release of the Monetary Policy Report at the Bank of England in London, Thursday, May 5, 2022. (AP Photo/Frank Augstein)

(AP Photo/Frank Augstein)

LONDON (AP) — 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. Federal Reserve stepped up its attack on inflation, approving the biggest rate increase in more than two decades and signaling that more are on the way. The Fed increased its key short-term rate by a half-percentage point, to a range of 0.75% to 1%.

Other central banks around the world, from Sweden to Australia, also have started taking similar action.

Soaring consumer prices in the U.K. are fueling a cost-of-living crisis marked by rocketing energy bills and surging food and transport prices. The Bank of England is struggling to show it is serious about reining in inflation without moving so aggressively that it undermines consumer confidence.

“The Bank of England has a difficult job ahead of it — inflationary pressures from external factors are getting higher and higher,” Dmitri Theodosiu, head of foreign exchange and interest rates trading at Investec, said in a note to investors. “And with the cries of ‘higher, higher’ ringing in the ears comes the knowledge that too much intervention could see a damaging fall to the economy.”

Bank of England policymakers indicated that more rate increases could be in the pipeline based on the latest economic outlook.

“Most members of the committee judge that some degree of further tightening in monetary policy may still be appropriate in the coming months,” the bank’s report said.

Britain’s inflation rate rose to a 30-year high of 7% in March, more than triple the central bank’s target of 2%. Economists expect inflation to reach 9% or more later this year.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

Police shoot and kill Wisconsin man after domestic dispute

APPLETON, Wis. (AP) — Police in Appleton, Wisconsin, shot and killed a man after responding to a domestic disturbance call, authorities said Saturday. The shooting happened after officers were confronted by an armed man when they were called to a home in Appleton on Friday night, the Wisconsin Department of Justice’s Division of Criminal Investigation […]
8 hours ago
FILE- In this undated photo 14-year-old Emmett L.Till from Chicago, is shown. Till, whose battered ...
Associated Press

Troubling questions unresolved in latest end to Till case

By her own telling, Mississippi authorities provided Carolyn Bryant Donham with preferential treatment rather than prosecution after her encounter with Emmett Till led to the lynching of the Black teenager in the summer of 1955. Instead of arresting Donham on a warrant that accused her of kidnapping days after Till’s abduction, an officer passed along […]
8 hours ago
A container ships passes Pfalzgrafenstein castle in the middle of the river Rhine in Kaub, Germany,...
Associated Press

Shippers prepare for worst as Rhine levels near critical low

Shipping companies prepared to halt the transport of goods on the Rhine as water levels in Germany’s biggest river neared a critically low point Saturday. An ongoing drought affecting much of Europe has lowered rivers such as the Rhine, preventing large ships with heavy loads from passing key waypoints and forcing them to use smaller […]
8 hours ago
Children watch as workers clean up after a rocket strike on a house in Kramatorsk, Donetsk region, ...
Associated Press

Russian shelling heavy in east; Ukraine strikes key bridge

KYIV, Ukraine (AP) — Russia’s military pounded residential areas across Ukraine overnight, claiming gains, as Ukrainian forces pressed a counteroffensive to try to take back an occupied southern region, striking the last working bridge over a river in the Russian-occupied Kherson region, Ukrainian authorities said Saturday. A Russian rocket attack on the city of Kramatorsk […]
8 hours ago
FILE - President Joe Biden speaks in the East Room of the White House in Washington, Tuesday, Aug. ...
Associated Press

Monkeypox? Climate? Deciding what’s a national emergency

WASHINGTON (AP) — In November 1979, a little over a week after student militants seized control of the U.S. Embassy in Tehran and took 52 American citizens hostage, President Jimmy Carter issued Executive Order 12170 declaring a national emergency against Iran. That order remains in effect today, renewed most recently in the weeks before last […]
8 hours ago
FILE - Musician R. Kelly leaves the Leighton Criminal Court building in Chicago on June 6, 2019. Ke...
Associated Press

R Kelly accuser to give key testimony on trial-fixing charge

CHICAGO (AP) — R. Kelly’s federal trial in Chicago that starts Monday is in many ways a do-over of his 2008 state child pornography trial, at which jurors acquitted the singer on charges that he produced a video of himself when he was around 30 having sex with a girl no older than 14. There’s […]
8 hours ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Most plumbing problems can be fixed with regular maintenance

Instead of waiting for a problem to happen, experts suggest getting a head start on your plumbing maintenance.
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

Vaccines are safe if you are pregnant or breastfeeding

Are you pregnant? Do you have a friend or loved one who’s expecting?
...
CANVAS ANNUITY

Best retirement savings rates hit 4.30%

Maximize your retirement savings with guaranteed fixed rates up to 4.30%. Did you know there is a financial product that can give you great interest rates as you build your retirement savings and provide you with a paycheck for life once you retire? It might sound too good to be true but it is not; this product is called an annuity.
Bank of England raises key rate to highest level in 13 years