On Thursday, the Bank of England raised its interest rates by 0.25%, continuing its ongoing battle against inflation, which surged unexpectedly in February. This marks the 11th consecutive increase, bringing the benchmark rate to 4.25%, its highest level since October 2008.
Despite recent banking sector turmoil, the central bank, like other major central banks, is determined to raise borrowing costs. In a statement, the Bank of England acknowledged that inflation had exceeded expectations and the near-term path of GDP was likely to be stronger than anticipated. The cost of food and visiting hotels and restaurants resulted in a 10.4% year-over-year surge in UK consumer prices in February, the first increase in four months.
The central bank believes that although the CPI inflation rate rose unexpectedly, it is expected to decline sharply for the remainder of the year. The US Federal Reserve increased its rates by 0.25% on Wednesday, while the European Central Bank raised its rates by 0.5% last week during the banking crisis, and the Swiss National Bank followed with an identical increase earlier on Thursday.