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The Bank of England announced that it has raised the UK’s key benchmark rate by 50 basis points, less than the 75-point squeeze expected by several traders, to 2.25% from 1.75% previously. Monetary tightening was the seventh in a row.
The decision was made to put a stop to inflation which, in the UK, has slowed slightly, rising to an annual rate of 9.9%, however well above the BoE’s target of 2%. Among other things, core inflation, which excludes the prices of energy and food products, remains particularly high, at an annual rate of 6.3%. The Bank of England announced today that it believes the UK is already in a recession. At 2.25%, UK rates now travel to the record of the last 14 years, i.e. since 2008.