Bank of England rate setter calls for 0.5% hike

A Bank of England rate setter voted for a 0.5% rise amid warnings of further increases.

The Bank increased interest rates to 4%, the first rise in three years.

While the vote for an increase was unanimous, not all rate setters agreed on the amount.

Eight members of the Bank of England’s Monetary Policy Committee voted for a rise of 0.25% this week, while one voted for a larger increase of 0.5%.

Every month that goes past without resolution in the conflict, more inflation builds up in the pipeline.”

Following the announcement, the Governor of the Bank of England, Andrew Bailey, warned that inflation is expected to rise to around 5% in the middle of next year.

He said: “Higher energy prices are feeding through to higher prices in other goods and services.”

He added: “Every month that goes past without resolution in the conflict, more inflation builds up in the pipeline.”

Bailey says the committee would act to bring inflation back to its 2% target.

However, he added a word of caution, saying continued interest rate rises were “not inevitable”.

Geopolitics

It follows the Democrats winning control of both chambers of Congress in the US, with President Trump acknowledging the role of the US-Israeli war on Iran in his party’s sweeping defeat.

Chancellor John Healey said: “The Iran conflict is reaching deep into the pockets of families and businesses here at home.

“In my Budget, I acted to give some breathing space to families and businesses.”