Bank of England raises interest rates to highest level since 2008

The Bank of England on Thursday raised interest rates by a quarter percentage point, making it the latest central bank to push borrowing costs higher as inflation pressures remain.

Why it matters: The Bank of England has acted aggressively to contain inflation in the U.K., with 14 consecutive rate increases. The country is facing the worst cost-of-living crisis of any major advanced economy.

Driving the news: Some economists expect other central banks, including the U.S. Federal Reserve, to conclude rate hikes soon.

• But that's not the case across the Atlantic, where the Bank of England signaled the possibility that interest rates may need to go even higher.
• "If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required," the central bank said in a statement.
• It also added that "some key indicators, notably wage growth, suggest that some of the risks from more persistent inflationary pressures may have begun to crystallise."

By the numbers: The Bank of England raised interest rates to 5.25%, the highest level since early 2008. It increased rates by a smaller amount than it did in June, when it surprised financial markets with a half-percentage point increase amid signs of stubborn inflation.

• Since then, the nation has received somewhat better news on inflation: In June, the U.K. Consumer Prices Index rose 7.9% in the 12 months through June, a sharp drop from 8.7% in May.

• Core CPI, watched closely by policymakers for clues about underlying inflation pressure, rose at a slower pace than economists anticipated: by 6.9%, down from the 7.1% annual rate in May.

What's next: In new forecasts published alongside the rate decision, the Bank of England expects inflation "to fall significantly further" to 5% by the end of the year, helped by lower energy, food and goods inflation.

• It also sees economic growth slowing, though it did not forecast a recession.