2023.02.0211:32:00UTC+00Bank Of England Raises Rate For 10th Straight Session

The Bank of England raised its benchmark rate for the tenth straight session on Thursday citing stronger-than-expected wage pressures and risks of greater persistence in underlying inflation.

The Monetary Policy Committee voted 7-2 to raise the bank rate by 50 basis points to 4.00 percent, the highest since 2008.

Swati Dhingra and Silvana Tenreyro voted to maintain the interest rate at 3.50 percent.

A majority of members said a 0.5 percentage point increase in Bank Rate at this meeting would address the risk that domestic wage and price pressures remained elevated even as external cost pressures waned.

"If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required," the MPC said.

The decision came a day after the US Federal Reserve softened its pace of tightening. The Fed raised the target range for the federal funds rate by 25 basis points to 4.50 to 4.75 percent.

In the monetary policy report, the BoE said inflation is expected to fall quickly this year and the recession would be much shallower than projected in November.

Gross domestic product is expected to shrink 0.1 percent in the first quarter of 2023. The bank forecast GDP to fall slightly throughout this year and the first quarter of 2024, as high energy prices and the path of market interest rates weigh on output.