Bank of England hikes interest rates again as prices surge

On Thursday, the Bank of England hiked interest rates for the second time in three months, putting the UK far ahead of the rest of Europe and the United States in the fight against rising inflation that is putting pressure on consumers and companies.

The monetary policy committee of the bank voted 5-4 to raise the key rate from 0.25 per cent to 0.5 per cent, with the dissenting members advocating for a higher increase. It also voted unanimously to begin reducing the bank’s holdings of UK government debt and corporate bonds, which it had built up since the global financial crisis more than a decade ago to help the economy.

Consumer prices in the United Kingdom increased by 5.4 per cent in the year to December, the highest rate in over 30 years. And things are only going to get tighter: The UK’s energy regulator stated on Thursday that household gas and electricity prices will jump by 54% in April, the same month that income taxes will rise by 1.5 per cent.

“Amid the global monetary policy regime shift from easing to tightening, the Bank of England is storming ahead, pressing forward with decisive action as a time when other central banks are falling behind the curve on inflation,” said Victoria Scholar, head of investment at Interactive Investor.