Bank of England Raises Interest Rate to 4% in 8-1 Vote
The central bank raised Bank Rate by a quarter point as energy costs added to inflation pressure. One member wanted a larger increase.
The Bank of England raised its benchmark interest rate by 0.25 percentage points to 4% in an 8-1 vote, according to the central bank's November policy decision published Thursday.
Eight members of the Monetary Policy Committee backed the quarter-point increase. Catherine Mann preferred a half-point rise to 4.25%, the minutes showed.
The bank said the conflict in the Middle East, now in its ninth month, had pushed global energy prices higher. U.K. consumer-price inflation reached 3.5% in September and is forecast to rise to around 5% by the middle of next year.
Policymakers said there was still limited evidence that higher energy prices were spreading into broader prices and wages. But they judged that inflation pressure building in the economy was enough to warrant a rate increase, while recent activity had generally been stronger than expected.
The bank expects inflation to fall later as the impact of energy-price increases fades and restrictive monetary policy weighs on demand. Its medium-term inflation target remains 2%.
The committee said interest rates are not on a preset path. Future decisions will depend on evidence about pay, pricing, spare capacity and the risk of higher energy prices creating lasting inflation.