The United Kingdom’s central bank has hiked interest rates for a fifth time since December in a bid to tame spiralling inflation, reports said.
The Bank of England said on Thursday that it would raise the cost of borrowing by 25 basis points to 1.25 per cent despite fears that soaring prices are already squeezing households and weighing on economic growth, CNN reported.
“Bank staff now expect GDP to fall by 0.3 per cent in the second quarter as a whole, weaker than anticipated at the time of the May Report,” the Bank of England said in a statement.
“Consumer confidence has fallen further, but other indicators of household spending appear to have held up. Some indicators of business sentiment have weakened, although they have so far remained more resilient than indicators of consumer confidence and consistent with positive underlying GDP growth,” it added, CNN reported.
The central bank said three members of its Monetary Policy Committee wanted to raise rates by 50 basis points to 1.5 per cent which would have been the biggest increase in 27 years but were outvoted by the other six.
Soaring food and fuel prices have plunged millions of Britons into the worst cost of living crisis in decades. Annual consumer price inflation rose to 9 per cent in April its highest since 1992. The Bank of England now expects inflation to rise slightly above 11 per cent in October, CNN reported.