Bank of England raises interest rates to highest level since 2008

LONDON — The Bank of England raised UK interest rates by 0.5% on Thursday, fighting inflation more aggressively than US banks.

The central bank has raised interest rates to 4%. This is the highest level since the global financial crisis deepened. UK inflation remains at a 41-year high, although he fell to 10.5% in December.

The Bank of England said inflation was likely to fall sharply for the rest of the year, mainly because past gains in energy and other prices miss the mark. However, it presents significant uncertainties to its projections.

“The labor market remains tight and pressures on domestic prices and wages are stronger than expected, suggesting a more sustained risk of underlying inflation,” the bank said in a statement.

It added that wholesale energy prices could also push UK inflation higher than expected.

The Bank of England had to weigh the current inflation and recession risks. The International Monetary Fund on Tuesday predicted that the UK would be the only major economy to contract this year.

The UK rate hike follows Wednesday’s 1/4 percentage point rate hike by the Federal Reserve. In contrast to the Bank of England, the Fed is slowing its pace of rate hikes as US inflation is starting to fall.

The European Central Bank is also expected to raise interest rates in 20 euro-using countries by 0.5% on Thursday. Inflation in the euro zone fell in January but remains at 8.5%, well above the ECB’s 2% target. —CNN