Keep readinglist of 4 items
The bank will “continue to monitor closely indications of persistent inflationary pressures”, it said in announcing its decision. “If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required.”
Still, Thursday’s was the smallest rate hike since June as the Bank of England forecasts a steep drop in inflation later this year. Inflation is expected to slow to 2.9 percent by the end of the year as energy costs fall and big price increases that were recorded last year drop out of the calculation.
Al Jazeera’s Paul Brennan, reporting from London, said the BoE is no longer predicting the UK economy will go into a recession.
“There is an expectation that the economy will grow … slightly within the next year, a little glimmer of hope there,” Brennan said.
“They also expect energy prices or the energy price contribution to inflation to turn negative during the course of this year,” he said. “We have the Ukraine war, which bumped up the price of energy, namely Russian gas, because of the shortage of that. That is expected to come out of the inflationary pressure over the next year, those pressures easing as people find alternatives.
“There are concerns as central banks around the world continue to try to put the brakes on inflation. It might spill over into a wider recessionary pressure on the economy. So it’s a very delicate balancing act that the central banks are trying to tread.”