The Bank of England Thursday raised its benchmark interest rates by 50 basis points to 1.75 percent, marking the largest interest rate hike since the central bank gained independence in 1997.
“Inflationary pressures in the United Kingdom and the rest of Europe have intensified significantly since the May Monetary Policy Report and the MPC’s previous meeting,” the BoE said in a statement.
The move comes as central banks worldwide step up their efforts to tame inflation. The European Central Bank last month raised interest rates by 50 basis points, larger than initially flagged, while the Federal Reserve opted for a 75-basis-point move.
The BoE’s six consecutive hike comes after the U.K.’s annual inflation rate hit a 40-year high of 9.4 percent in June — and is expected to rise further over the months ahead.
The Monetary Policy Committee voted by a majority of 8-1 to increase Bank Rate by 0.5 percentage points. One member preferred to increase Bank Rate by 0.25 percentage points, to 1.5 percent.
Policymakers also outlined a program of bond sales that may start after the September policy meeting and could see the central bank start off with sales of around £10 billion per quarter.
Looking ahead, the Bank will “take the actions necessary to return inflation to the 2 [percent] target sustainably in the medium term,” it said, adding that policy is not on a pre-set path.
“The scale, pace and timing of any further changes in Bank Rate will reflect the Committee’s assessment of the economic outlook and inflationary pressures,” it noted. “The Committee will be particularly alert to indications of more persistent inflationary pressures, and will if necessary act forcefully in response.”