Bank of England Raises Interest Rate for First Time in Three Years

London, Nov 5 (KUNA) -- The Bank of England announced on Thursday its decision to raise interest rates for the first time in three years, citing renewed inflationary pressures driven by soaring energy costs. In its regular report, the Monetary Policy Committee (MPC) stated that it had decided to raise the interest rate by a quarter of a percentage point to reach 4 percent. It noted that the rate hike was supported by all nine committee members, with the exception of one member who voted for a larger increase to 4.25 percent.

The committee justified the decision by pointing to underlying inflationary pressures, primarily stemming from higher energy prices and their negative impact on businesses and households. It highlighted that the ongoing conflict in the Middle East, now entering its ninth month, represents the biggest factor contributing to the rise in global energy prices, which were already at elevated levels.

In this regard, the report noted that the UK’s inflation rate rose to 3.5 percent in September, with expectations for it to reach around 5 percent by mid-next year before declining again as the impact of higher energy prices begins to fade. It added that the effect of overseas conflicts on global energy prices remains the main source of uncertainty surrounding inflation forecasts in Britain. The MPC emphasized its commitment to exercising caution regarding indirect effects that could sustain inflation, while taking into account any potential changes arising from weak economic activity. (End) M.R.N. / T.M.A.