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Bank of England hikes key rate by 50 basis points, will continue to respond ‘forcefully’ if needed

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  • December 15, 2022

The Bank of England hiked its benchmark interest rate by an historic 75 basis points in November — its largest increase since 1989.

Toby Melville | Afp | Getty Images

LONDON — The Bank of England on Thursday hiked its main interest rate by 50 basis points and signaled that more tightening will be needed to rein in inflation.

The Monetary Policy Committee voted 6-3 in favor of the half-percentage-point hike, which takes the bank rate to 3.5%. The rise marks a slowdown from November’s 75 basis point increase.

Having hit a 41-year high in October, the annual rise in the U.K. consumer price index slowed to 10.7% in November, new figures revealed Wednesday.

The slowdown mirrored signs across other major economies such as the U.S. and Germany that inflation may have peaked, though it remains uncomfortably high and well above the Bank of England’s 2% target.

The central bank is trying to drag inflation back toward its target while also remaining sensitive to a weakening economy beset by several unique domestic pressures as well as global headwinds.

This was borne out in the latest U.K. labor market data, published earlier this week, which showed an uptick in both unemployment and wage growth, while economic inactivity and long-term illness rates also remain historically high.

This is a breaking news story and will be updated shortly.

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