Bank of England launches biggest interest rate hike in 27 years as inflation soars

BOE Governor Andrew Bailey has warned the Bank is walking a “narrow path” between growth and inflation.

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LONDON — The Bank of England on Thursday hiked interest rates by 50 basis points, its largest single increase since 1995, as it tries to rein in runaway inflation.

The sixth consecutive increase takes borrowing costs to 1.75% and marks the first half-point hike since the Bank was made independent from the British government in 1997.

Markets had broadly priced in the more aggressive approach at the August meeting, after U.K. inflation hit a new 40-year high of 9.4% in June as food and energy prices continued to surge, deepening the country’s historic cost-of-living crisis.

Bank of England Governor Andrew Bailey vowed last month that there would be “no ifs or buts” in the central bank’s commitment to returning inflation toward its 2% target.

Analysts had been keen to assess the language in the Bank’s latest report, particularly its previous commitment to act “forcefully” on inflation.

Source: CNBC

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