The Bank of England has raised interest rates for the first time in more than three years, taking the base rate from 3.75% to 4%. The decision by the Monetary Policy Committee, which came a week after the budget, aims to bear down on soaring inflation.
Rising prices have been fueled by the Iran war, which has driven up energy costs. Although energy prices have fallen since the midterms raised hopes for an end to the conflict, the bank warned that another increase may be necessary to curb the inflation shock.
Within the committee, eight members voted for the current move, while one policymaker, Catherine Mann, voted for a more dramatic half-point increase to 4.25%. The central bank warned that inflation is likely to reach around 5% in the middle of 2027 and would climb to about 5 percent next year, remaining far above its target.