The Bank of England has raised its key interest rates for the third time since December as it moves faster than other central banks in the fight against the global wave of inflation that has accelerated since Russia’s invasion of Ukraine.
The bank raised its key rate to 0.75% earlier this month after the war pushed oil prices to a 13-year high. This comes a day after the US Federal Reserve raised its benchmark short-term rate to 0.25% to control the worst inflation in the early 1980s.
The Bank of England, which voted 8-1 in favor of the increase, said Ukraine’s aggression had led to “huge increases” in energy and other commodity prices and that supply chain problems were likely to worsen, disrupting shipments of many raw materials. . The bank said it now expects inflation to be prolonged and at a higher rate than before the war.
“Global inflationary pressures will intensify in the coming months, as growth in the net energy importing economy, including the United Kingdom, may slow down,” the bank said in a statement.
As the global coronavirus epidemic began to erupt, the Bank of England began raising rates in December amid rising consumer demand for energy and raw materials needed for industry.
According to the Office for National Statistics, consumer price inflation accelerated to 5.5% year-on-year in January.
Prior to Russia’s invasion of Ukraine, the Bank of England had expected inflation to be at around 7.25% in April, more than three times its 2% target. The bank said on Thursday that it now expects inflation to accelerate to about 8% by the end of June and expects it to rise further towards the end of this year.
Central banks in other countries may soon raise interest rates with the Bank of England The Federal Reserve has indicated it could raise rates six more times this year.
However, Turkey’s central bank kept rates unchanged on Thursday despite inflation rising above 54%. The European Central Bank also did not touch the rate but last week announced a rapid exit from its economic stimulus efforts to tackle record inflation in 19 countries using the euro.