Bank of England raises borrowing costs to 15-year peak of 5.25%, signals rates to stay high
LONDON, Aug 3 - The Bank of England raised its key interest rate by a quarter of a percentage point to a 15-year peak of 5.25% on Thursday, and gave a new warning that borrowing costs were likely to stay high for some time.
"Some of the risks of more persistent inflationary pressures may have begun to crystallise," it added. "Inflation hits the least well-off hardest and we need to make absolutely sure that it falls all the way back to the 2% target," Governor Andrew Bailey said.Policymakers voted 6-3 for the increase, but were split three ways on the decision for the first time this year. Two MPC members - Catherine Mann and Jonathan Haskel - voted for a half-point increase this month, while Swati Dhingra voted for no change, as she has all this year, warning of overtightening.
This will relieve Prime Minister Rishi Sunak, who pledged in January to halve inflation this year, a goal which had looked challenging.
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