The Bank of England voted to raise its base rate to 2.25% from 1.75% Thursday, lower than the 0.75 percentage point rise that had been expected by many traders.
Five members of its Monetary Policy Committee voted for the 0.5 percentage point rise, while three voted for a higher 0.75 percentage point rise that had been expected by many. One member voted for a 0.25 percentage point rise.
The bank said it was not on a"pre-set path" and would continue to assess data to decide the scale, pace and timing of future changes in the Bank Rate. The committee also voted to begin the sale of U.K. government bonds held in its Asset Purchase Facility shortly after the meeting and noted a"sharp increase in government bond yields globally.
The devaluation of the pound has been caused by a combination of strength in the dollar — as traders flock to the perceived safe-haven investment amid global market volatility and as the U.S. Federal Reserve hikes its own interest rates — and grim forecasts for the U.K. economy.
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