Mar 23, 2023 - Economy

Bank of England raises interest rates again after hot inflation report

Courtenay Brown

Andrew Bailey, governor of the Bank of England, at a news conference last month. Photo: Chris Ratcliffe/Bloomberg via Getty Images

The Bank of England raised rates by a quarter-percentage point on Thursday, the latest central bank to press on in an effort to tackle inflation despite signs of stress in the global banking system.

Why it matters: The move came after a surprisingly sharp jump in price gains in the U.K., where inflation in the year through February reached 10.4%.

What they're saying: In a statement, Bank of England officials said they expect inflation will "fall significantly" in the coming months, thanks to a government cap on household energy bills and a drop in wholesale oil prices.

Officials also said that the U.K. banking system was "resilient," though noted the sharp moves in global financial markets since the failure of Silicon Valley Bank and in the lead-up to UBS's purchase of Credit Suisse.

The bottom line: Hotter-than-expected inflation continues to complicate policy decisions for central bankers.

Before Thursday's decision, the Bank of England had previously hinted its aggressive rate hiking campaign — underway since December 2021 — could soon pause after a more benign outlook for inflation.

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Bank of England raises interest rates again after hot inflation report

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