As a result of the March meeting, the Bank of England decided to raise the base interest rate from 0.5% to 0.75%, as expected by most analysts and economists. Thus, the rate has been raised for the third time in a row since December. The decision was taken almost unanimously: eight out of nine members of the Monetary Policy Committee voted in favor. Analysts note that the increase in the rate to 0.75% returns the cost of borrowing in the UK to levels seen before the Covid-19 pandemic. The central bank itself said it had decided to raise rates amid persistently high inflation. According to the latest statistics, UK consumer prices jumped 5.5% in January compared to the same month last year. This figure was the highest since March 1992. The Bank of England expects inflation to continue accelerating in the coming months, reaching around 8% in the second quarter of 2022. The regulator noted that the situation in Ukraine led to a significant increase in prices for energy carriers and other commodities. Further escalation of the conflict will inevitably exacerbate global supply chain problems and heighten uncertainty about the outlook for the global economy. The British Central Bank expects that inflationary pressure in the world will increase significantly over the next few months, and the growth of the economies of world energy importers, on the contrary, will slow down. Taking into account the current situation, the Bank of England intends to continue the gradual tightening of monetary policy: another rate hike is also expected in May – up to 1%.
