Bank of England Raises Base Interest Rate by 0.15 Percentage Points After 3 Years... Intensifies Inflation Control Efforts

The Bank of England in London, England
Photo by Yonhap News

The Bank of England (BOE), the central bank of the United Kingdom, has raised its key interest rate for the first time in over three years. This move is interpreted as a serious effort to curb rapidly rising inflation.

On the 16th (local time), the BOE announced at the Monetary Policy Committee (MPC) meeting that it raised the key interest rate by 0.15 percentage points, from 0.1% to 0.25%.

Although the spread of Omicron, a new variant of COVID-19, emerged as a variable, the BOE appears to have judged that raising interest rates is necessary to control inflation first.

Previously, some in the financial market expected a rate hike last month, but the BOE decided to keep rates unchanged at that time, stating the need to monitor employment conditions further.

This is the first interest rate increase by the BOE since August 2018, when it raised the rate by 0.25 percentage points to 0.75%.

In the UK, the consumer price inflation rate in November reached 5.1%, the highest in over a decade. This level far exceeds the BOE's inflation target of 2%. Initially, the BOE had forecast that inflation would temporarily exceed 5% in the spring of next year.

Besides the UK, the United States is also considering raising interest rates in response to rising inflation.

The day before, the U.S. Federal Reserve (Fed) increased the scale of its asset purchase tapering, moving up the scheduled end date from June next year to March, and indicated the possibility of raising the key interest rate three times next year.

This content was produced with the assistance of AI translation services.